<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      ------------------------------------

                                   Form 10-K
(Mark One)
     [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

     [ ]         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR
                  TRANSITION REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
             For the transition period from           to

                           Commission File No. 1-2438

                               ISPAT INLAND INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      36-1262880
           (State of Incorporation)                 (I.R.S. Employer Identification No.)
  3210 WATLING STREET, EAST CHICAGO, INDIANA                       46312
   (Address of principal executive offices)                      (Zip Code)
</TABLE>

     Registrant's telephone number, including area code: (219) 399-1200

     Registrant meets the conditions set forth in general instruction I(1)(a)
and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format.

     Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
TITLE OF EACH CLASS                              NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------                              -----------------------------------------
<S>                                            <C>
First Mortgage Bonds:
  Series R, 7.90% Due January 15, 2007........         New York Stock Exchange, Inc.
</TABLE>

     Securities registered pursuant to Section 12(g) of the Act:
                                      None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in any amendment to this Form 10-K.  [X]

     The number of shares of Common Stock ($.01 par value) of the registrant
outstanding as of March 26, 2001 was 100, all of which shares were owned by
Ispat Inland Holdings, Inc.
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<PAGE>   2

                                     PART I

ITEM 1.  BUSINESS.

     Ispat Inland Inc. (the "Company" or the "Successor Company"), a Delaware
corporation and an indirect wholly owned subsidiary of Ispat International N.V.
("Ispat"), is an integrated domestic steel company. The Company produces and
sells a wide range of steels, of which approximately 99% consists of carbon and
high-strength low-alloy steel grades. It is also a participant in certain iron
ore production and steel-finishing joint ventures.

     The Company has a single business segment, which comprises the operating
companies and divisions involved in the manufacturing of basic steel products
and in related raw materials operations.

     On July 16, 1998, Ispat acquired Inland Steel Company (the "Predecessor
Company") from Inland Steel Industries, Inc. ("Industries") in accordance with
an Agreement and Plan of Merger ("Agreement"), dated as of May 27, 1998, amended
as of July 16, 1998 (the "Acquisition"). The Predecessor Company was renamed
Ispat Inland Inc. on September 1, 1998. Ispat paid $1,143.1 million, plus an
assumption of certain liabilities or obligations, to acquire the Predecessor
Company.

OPERATIONS

     The Company is directly engaged in the production and sale of steel and
related products. Certain Company subsidiaries and affiliates are engaged in the
mining and pelletizing of iron ore and in the operation of a cold-rolling mill
and steel galvanizing lines. All raw steel made by the Company is produced at
its Indiana Harbor Works located in East Chicago, Indiana, which also has
facilities for converting the steel produced into semi-finished and finished
steel products.

     The Company has two divisions--the Flat Products division and the Bar
division. The Flat Products division manages the Company's iron ore operations,
conducts its ironmaking operations, and produces the major portion of its raw
steel. This division also manufactures and sells steel sheet, strip and certain
related semi-finished products for the automotive, steel service center,
appliance, office furniture and electrical motor markets. The Bar division
manufactures and sells special quality bars and certain related semi-finished
products to the automotive industry directly as well as through forgers and cold
finishers, and also sells to steel service centers and heavy equipment
manufacturers.

     The Company and Nippon Steel Corporation ("NSC") are in joint ventures that
operate steel-finishing facilities near New Carlisle, Indiana. The total cost of
these two facilities, I/N Tek and I/N Kote, was approximately $1.1 billion. I/N
Tek, owned 60% by a wholly owned subsidiary of the Company and 40% by an
indirect wholly owned subsidiary of NSC, operates a cold-rolling mill. I/N Kote,
owned equally by a wholly owned subsidiary of the Company and by an indirect
wholly owned subsidiary of NSC, operates two galvanizing lines.

RAW STEEL PRODUCTION AND MILL SHIPMENTS

     The following table shows, for the three years indicated, the Company's
production of raw steel and, based upon American Iron and Steel Institute data,
its share by percentage of total domestic raw steel production:

<TABLE>
<CAPTION>
                                                                RAW STEEL PRODUCTION
                                                              -------------------------
                                                                                % OF
                                                                             U.S. STEEL
                                                              (000 TONS*)     INDUSTRY
                                                              -----------    ----------
<S>                                                           <C>            <C>
2000........................................................     5,780          5.2**
1999........................................................     5,704          5.3
1998........................................................     5,669          5.2
</TABLE>

---------------
*  Net tons of 2,000 pounds.
** Based on preliminary data from the American Iron and Steel Institute.

                                        2
<PAGE>   3

     The annual raw steelmaking capacity of the Company is 6.0 million net tons.
The basic oxygen process accounted for 93% and 92% of raw steel production of
the Company in 2000 and 1999, respectively. The remainder of such production was
accounted for by the electric furnace process.

     The total tonnage of steel mill products shipped by the Company for each of
the five years 1996 through 2000 was: 5.6 million tons in 2000; 5.8 million tons
in 1999; 5.2 million tons in 1998; 5.3 million tons in 1997; and 5.1 million
tons in 1996. In both 2000 and 1999, sheet, strip and certain related
semi-finished products accounted for 84% of the total tonnage of steel mill
products shipped from the Indiana Harbor Works, and bar and certain related
semi-finished products accounted for 16%.

     In each of 2000 and 1999, approximately 92% of the shipments of the Flat
Products division and 93% and 94%, respectively, of the shipments of the Bar
division were to customers in 20 mid-American states. Approximately 74% of the
shipments of the Flat Products division and 85% of the shipments of the Bar
division in 2000 and 1999 were to customers in a five-state area comprised of
Illinois, Indiana, Ohio, Michigan and Wisconsin. Both divisions compete in these
geographical areas, principally on the basis of price, service and quality, with
the nation's largest producers of raw steel as well as with foreign producers
and with many smaller domestic mills.

     The steel market is highly competitive with major integrated producers,
including the Company, facing competition from a variety of sources. Many steel
products compete with alternative materials such as plastics, aluminum,
ceramics, glass and concrete. Domestic steel producers have also been adversely
impacted by imports from foreign steel producers. Imports of steel products
accounted for 26.9% of the domestic market in 2000, up from 26.4% in 1999. The
issue surrounding unfairly traded imports aggravates market conditions, in
particular with respect to foreign government subsidies that are used to offset
operating losses by foreign producers.

     Mini-mills provide significant competition in various product lines.
Mini-mills are relatively efficient, low-cost producers that manufacture steel
principally from scrap in electric furnaces and, at this time, generally have
lower capital, overhead, employment and environmental costs than the integrated
steel producers, including the Company. Mini-mills have been adding capacity and
expanding their product lines in recent years to produce larger structural
products and certain flat rolled products. Thin-slab casting technologies have
allowed mini-mills to enter certain sheet markets traditionally supplied by
integrated producers. Several mini-mills using this advanced technology are in
operation in the United States and a significant increase in modern mini-mill
capacity is underway in the United States.

     For the three years indicated, shipments by market classification of steel
mill products produced by the Company at its Indiana Harbor Works are set forth
below. As shown in the table, a substantial portion of shipments by the Flat
Products division was to steel service centers and transportation-related
markets.

<TABLE>
<CAPTION>
                                                                 PERCENTAGE OF TOTAL
                                                              TONNAGE OF STEEL SHIPMENTS
                                                              --------------------------
                                                              2000       1999       1998
                                                              -----      -----      ----
<S>                                                           <C>        <C>        <C>
Steel Service Centers.......................................    34%        35%       34%(1)
Automotive..................................................    31         33        32
Steel Converters/Processors.................................    14         12        13
Appliance...................................................     9         10        10
Industrial, Electrical and Farm Machinery...................     7          6         7
Construction and Contractors' Products......................     1          1         2
Other.......................................................     4          3         2
                                                               ---        ---       ---
                                                               100%       100%      100%
                                                               ===        ===       ===
</TABLE>

---------------
(1) The service center percentages above include shipments to prior affiliates
    of the Company of 6% in 1998. The data for 1998 reflects the change in
    status of Ryerson Tull, Inc. to a non-affiliate due to the Ispat acquisition
    of the Company on July 16, 1998.

                                        3
<PAGE>   4

     Some value-added steel processing operations for which the Company does not
have facilities are performed by outside processors, including joint ventures,
prior to shipment of certain products to the Company's customers. In each of
2000 and 1999, approximately 43% of the products produced by the Company were
processed further through value-added services such as electrogalvanizing,
painting and slitting.

     Approximately 81% of the finished steel shipped to customers during 2000
was transported by truck, with 18% transported by rail, and under 1% by barge. A
wholly owned truck transport subsidiary of the Company was responsible for
shipment of approximately 22% of the total tonnage of products transported by
truck in 2000.

     Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices located
in Chicago, Illinois; Southfield, Michigan; and Nashville, Tennessee.
Substantially all of the steel mill products produced by the Bar division are
marketed through its sales office in East Chicago, Indiana.

     See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
steel manufacturing operations.

RAW MATERIALS

     The Company obtains iron ore pellets primarily from two iron ore
properties, in which the Company or a subsidiary of the Company have an
interest--the Empire Mine in Michigan and the Minorca Mine in Minnesota.

     During the second quarter of 1997, the Company completed the sale of its
interest in the Wabush Mines located in Labrador and Quebec, Canada. The Company
entered into a contract with the purchaser of such interest, effective January
1, 1997 and expiring December 31, 2006, to sell to the Company, at prices
approximating market, any of the Company's iron ore pellet requirements, up to
one million gross tons annually, not met by pellet sources in which the Company
owns an equity interest. See "Properties Relating to Operations--Raw Materials
Properties and Interests" in Item 2 below for further information relating to
such iron ore properties.

     The following table shows (1) the iron ore pellets available to the Company
as of December 31, 2000, from properties of its subsidiary and through interests
in raw materials ventures; (2) 2000 and 1999 iron ore pellet production or
purchases from such sources; and (3) the percentage of the Company's iron ore
requirements represented by production or purchases from such sources in 2000
and 1999.

<TABLE>
<CAPTION>
                                                                     IRON ORE
                                                              TONNAGES IN THOUSANDS
                                                             (GROSS TONS OF PELLETS)
                                            ----------------------------------------------------------
                                                                                            % OF
                                                                      PRODUCTION      REQUIREMENTS(1)
                                              AVAILABLE AS OF       --------------    ----------------
                                            DECEMBER 31, 2000(2)    2000     1999     2000       1999
                                            --------------------    -----    -----    -----      -----
<S>                                         <C>                     <C>      <C>      <C>        <C>
ISPAT INLAND MINING COMPANY
Minorca (100% owned)--Virginia, MN........         48,636           2,871    2,871     41         43
IRON ORE VENTURE
Empire (40% owned)--Palmer, MI............         60,000           3,209    3,334     46         49
                                                  -------           -----    -----     --         --
  Total Iron Ore..........................        108,636           6,080    6,205     87         92
                                                  =======           =====    =====     ==         ==
</TABLE>

---------------

(1) Requirements in excess of production are purchased or taken from stockpile.
(2) Net interest in proven reserves.

     All of the Company's coal requirements are satisfied from independent
sources. In connection with commencement of operations of the heat recovery coke
battery in 1998 and the associated energy facility discussed below (which are
not assets of the Company), the Company's coal fired generating station was
idled, thereby eliminating the Company's steam coal requirements.
                                        4
<PAGE>   5

     The Company's other coal requirements are for the PCI Associates joint
venture, in which a subsidiary of the Company holds a 50% interest. The PCI
facility pulverizes coal for injection into the Company's blast furnaces. During
2000 and 1999, the PCI facility's coal needs were satisfied under short term
contracts.

     The Company, Sun Coal and Coke Company ("Sun"), and a unit of NIPSCO
Industries ("NIPSCO") have jointly developed a heat recovery coke battery and an
associated energy recovery and flue-gas desulphurization facility, located on
land leased from the Company at its Indiana Harbor Works. Sun designed, built,
financed, and operates the cokemaking portion of the project. A unit of NIPSCO
designed, built, financed, and operates the portion of the project which cleans
the coke plant's flue gas and converts the heat into steam and electricity. Sun,
the NIPSCO unit and other third parties invested approximately $350 million in
the project which commenced operations in the first quarter of 1998. The Company
has committed to take, for approximately 15 years, 1.2 million tons of coke
annually on a take-or-pay basis at prices determined by certain cost factors, as
well as energy produced by the facility, through a tolling arrangement. During
both 2000 and in 1999, the Company satisfied 65% of its total coke needs under
such arrangement. The Company advanced $30 million during construction of the
project, which is recorded as a deferred asset on the balance sheet and will be
credited against required cash payments during the second half of the energy
tolling arrangement. The remainder of the Company's coke needs are supplied
under short term contracts through third party purchases.

     The Company sold all of its limestone and dolomite properties in 1990. The
Company entered into a long-term contract with the buyer of the properties to
purchase, subject to certain exceptions and at prices which approximate market,
the full amount of the annual limestone needs of the Indiana Harbor Works
through 2002.

     Approximately 56% and 53% of the iron ore pellets and all of the limestone
received by the Company at its Indiana Harbor Works were transported by two of
the Company's three formerly owned ore carriers in 2000 and 1999, respectively
(the third carrier remains in reserve status). The Company's three formerly
owned ore carriers were sold to a third party during 1998. These ore carriers
are managed by the new owner, but their shipping services are retained by the
Company under a time-charter. Another previously leased ore carrier was returned
to the lessor in March 1999. Agreements have been made for the transportation on
the Great Lakes of the remainder of the Company's iron ore pellet requirements.

     Approximately 53% and 58% of the Company's coke requirements were received
by conveyor belt from the heat recovery coke battery discussed above in 2000 and
1999, respectively. Of the remainder in 2000, 31% was received in the Company's
hopper cars, 26% in leased hopper cars, 11% in supplier-owned hopper cars, 1% in
independent carrier-owned hopper cars, 25% in independent carrier-owned barges,
and 6% by truck. All of the Company's coal requirements were received in
independent carrier-owned hopper cars.

     See "Energy" below for further information relating to the use of coal in
the operations of the Company.

PRODUCT CLASSES

     The following table sets forth the percentage of consolidated net sales,
for the three years indicated, contributed by each class of similar products of
the Company that accounted for 10% or more of consolidated net sales in such
time period. The data includes sales to affiliates of the Company.

<TABLE>
<CAPTION>
                                                              2000    1999    1998
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Sheet and Strip.............................................   82%     83%     82%
Bar.........................................................   18      17      18
                                                              ---     ---     ---
                                                              100%    100%    100%
                                                              ===     ===     ===
</TABLE>

     Sales to Ryerson Tull, Inc. approximated 10% of consolidated net sales
during 2000 and 12% in 1999. No other customer, except I/N Kote, accounted for
more than 10% of the consolidated net sales of the Company during the noted
periods.

                                        5
<PAGE>   6

CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURES

     In recent years, the Company and its subsidiaries have made substantial
capital expenditures, principally at the Indiana Harbor Works, to improve
quality and reduce costs, and for pollution control. Additions by the Company
and its subsidiaries to property, plant and equipment, together with retirements
and adjustments, for the five years ended December 31, 2000, are set forth
below. Net capital additions during such period aggregated $416.6 million.

<TABLE>
<CAPTION>
                                                     RETIREMENTS                   NET CAPITAL
                                        ADDITIONS     OR SALES      ADJUSTMENTS     ADDITIONS
                                        ---------    -----------    -----------    -----------
                                                        (DOLLARS IN MILLIONS)
<S>                                     <C>          <C>            <C>            <C>
2000..................................   $ 83.0         $ 2.0          $ --          $ 81.0
1999..................................     55.1           1.3            --            53.8(1)
1998..................................     65.4           3.1           2.9            65.2(1)
1997..................................     98.4          40.8           6.1            63.7
1996..................................    155.8           8.5           5.6           152.9
</TABLE>

---------------
(1) 1999 and 1998 results do not reflect the revaluation of property, plant and
    equipment performed as a result of the acquisition of the Company on July
    16, 1998.

     In July 1987, a wholly owned subsidiary of the Company formed a
partnership, I/N Tek, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate a cold-rolling facility with an annual
capacity of 1,600,000 tons, of which approximately 40% is cold-rolled substrate
for I/N Kote (described below). The I/N Tek facility is located near New
Carlisle, Indiana. The Company, which owns, through its subsidiary, a 60%
interest in the I/N Tek partnership is, with certain limited exceptions, the
sole supplier of hot band to be processed by the I/N Tek facility and generally
has exclusive rights to the production capacity of the facility.

     In September 1989, a wholly owned subsidiary of the Company formed a second
partnership, I/N Kote, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate two sheet steel galvanizing lines adjacent
to the I/N Tek facility. The subsidiary of the Company owns a 50% interest in
I/N Kote. The I/N Kote facility consists of a hot-dip galvanizing line and an
electrogalvanizing line with a combined annual capacity of 1,000,000 tons. The
Company has guaranteed 50% of I/N Kote's permanent financing. I/N Kote has
contracted to acquire its cold-rolled steel substrate from the Company, which
supplies the substrate from the I/N Tek facility and the Company's Indiana
Harbor Works.

     The amount budgeted for 2001 capital expenditures by the Company and its
subsidiaries is approximately $62 million. It is anticipated that capital
expenditures will be funded from cash generated by operations and borrowings
under financing arrangements. (See "Environment" below for a discussion of
capital expenditures for pollution control purposes included in the foregoing
amount.)

EMPLOYEES

     The monthly average number of active employees of the Company and its
subsidiaries was approximately 7,900 and 8,300 in 2000 and 1999, respectively.
At year-end 2000 and 1999, respectively, approximately 6,300 and 6,500 employees
(including for both years a total of approximately 400 employees at I/N Tek and
I/N Kote) were represented by the United Steelworkers of America, of whom
approximately 240 were on furlough or indefinite layoff at year-end 2000. Total
employment costs increased from $588 million in 1999 to $598 million in 2000 as
the reduction in salaries and wages was more than offset by increases in benefit
costs.

     The labor agreement between the Company and the United Steelworkers of
America terminated on July 31, 1999 and a new agreement was negotiated to be
effective August 1, 1999. This agreement covers wages and benefits through July
31, 2004. Among other things, this agreement provides wage increases of $.50 per
hour in 2000 and 2001, and of $1.00 per hour in 2003. The agreement also
contains provisions that the United Steelworkers will cooperate with the Company
to continuously improve the productivity of its operations. At the expiration of
the agreement, both parties have agreed to negotiate a successor agreement

                                        6
<PAGE>   7

without resorting to strikes or lockouts. The successor agreement will be
patterned on the agreements established at the time by the other domestic
integrated steel producers. Any disputes concerning adoption of the pattern will
be resolved through an arbitration process. In consideration of the foregoing,
the Company committed to invest in new primary production facilities at the
Indiana Harbor Works. One additional holiday was provided and retirement
benefits were increased for active employees and certain current retirees.
Certain retiree healthcare obligations are secured through certain trust and
second mortgage arrangements.

ENVIRONMENT

     The Company is subject to environmental laws and regulations concerning
emissions into the air, discharges into ground water and waterways, and the
generation, handling, labeling, storage, transportation, treatment and disposal
of waste material. These include various federal statutes regulating the
discharge or release of pollutants to the environment, including the Clean Air
Act, Clean Water Act, Resource Conservation and Recovery Act ("RCRA"),
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA," also known as "Superfund"), Safe Drinking Water Act, and Toxic
Substances Control Act, as well as state and local requirements. Violations of
these laws and regulations can give rise to a variety of civil, administrative,
and, in some cases, criminal actions and could also result in substantial
liabilities or require substantial capital expenditures. In addition, under
CERCLA the United States Environmental Protection Agency (the "EPA") has
authority to impose liability for site remediation on waste generators, past and
present site owners and operators, and transporters, regardless of fault or the
legality of the original disposal activity. Liability under CERCLA is strict,
joint and several.

     Capital spending for pollution control projects totaled $2 million in 2000,
versus $3 million in 1999. Another $41 million (non-capital) was spent in 2000
to operate and maintain pollution control equipment, the same amount spent the
year earlier. During the five years ended December 31, 2000, the Company has
spent $246 million to construct, operate and maintain environmental control
equipment at its various locations.

     Environmental projects previously authorized and presently under
consideration will require capital expenditures of approximately $9 million in
2001. In addition, plans are under consideration for major projects in the steel
making and coatings area at the Indiana Harbor Works or at the I/N Kote facility
that would include significant expenditures for pollution control equipment. It
is estimated that capital expenditures of up to $25 million would be required
for pollution control equipment over the next two to three years should these
projects be implemented. It is anticipated that the Company would make annual
capital expenditures of $2 million to $5 million on environmental projects
during each of the four years following such implementation. In addition, the
Company will have ongoing annual expenditures (non-capital) of $40 million to
$50 million for the operation of air and water pollution control facilities to
comply with current federal, state and local laws and regulations. Due to the
inability to predict the costs of corrective action that may be required under
the Resource Conservation and Recovery Act and the consent decree in the EPA
lawsuit (the "1993 EPA Consent Decree"), the Company cannot predict the amount
of additional environmental expenditures that will be required. Such additional
environmental expenditures, excluding amounts that may be required in connection
with the 1993 EPA Consent Decree, however, are not expected to be material to
the financial position or results of operations of the Company.

     The Company is a defendant in various environmental and other
administrative or judicial actions initiated by governmental agencies. Some of
these actions are described in more detail under "Legal Proceedings" below.
While it is not possible to predict the outcome of these matters, we do not
expect environmental expenditures, excluding amounts that may be required in
connection with the 1993 EPA Consent Decree, which is described below, to
materially affect the Company's results of operations or financial position.
Remediation required under the 1993 EPA Consent Decree will require significant
expenditures over the next several years that may be material to the Company's
results of operations or the Company's financial position.

                                        7
<PAGE>   8

ENERGY

     Coal, together with coke, all of which are purchased from independent
sources, accounted for approximately 68% of the energy consumed by the Company
at the Indiana Harbor Works in 2000 and 66% in 1999.

     Natural gas and fuel oil supplied approximately 25% of the energy
requirements of the Indiana Harbor Works in 2000 and 27% in 1999, and are used
extensively by the Company at other facilities that it owns or in which it has
an interest. Utilization of the pulverized coal injection facility has reduced
natural gas and fuel oil consumption at the Indiana Harbor Works.

     The Company both purchases and generates electricity to satisfy electrical
energy requirements at the Indiana Harbor Works. In 2000 and 1999, respectively,
the Company produced approximately 3% and 9% of its electrical energy
requirements at the Indiana Harbor Works. The purchase of electricity at the
Indiana Harbor Works is subject to curtailment under rules of the local utility
when necessary to maintain appropriate service for various classes of its
customers.

     A subsidiary of NIPSCO leases land at the Indiana Harbor Works where it
built a 90 megawatt turbine generating facility. Pursuant to a
15-year-toll-charge contract between the Company and the NIPSCO subsidiary, the
facility converts coke plant flue gas into electricity and plant steam for use
by the Company. The facility became operational in 1998. In 2000 and 1999,
respectively, this facility produced 23% and 17% of the purchased electricity
requirements at the Indiana Harbor Works. For additional information regarding
this facility, see the discussion under "Item 1. Business--Operations--Raw
Materials" on page 4 and 5 of this document.

     A subsidiary of NIPSCO leases land at the Indiana Harbor Works where it
built a 75 megawatt steam turbine generating facility. Pursuant to a
15-year-toll-charge contract between the Company and the NIPSCO subsidiary, the
facility generates electricity for use by the Company utilizing steam produced
by burning waste blast furnace gas. The facility became operational in the first
half of 1996. In 2000 and 1999, respectively, this facility produced 21% and 23%
of the purchased electricity requirements of the Indiana Harbor Works.

FORWARD-LOOKING STATEMENTS

     This document contains forward-looking statements concerning possible or
assumed future results of operations, financing plans, competitive position,
potential growth and future expenditures. Forward looking statements include all
statements that are not historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions. Undue reliance should not
be placed on any forward-looking statements, which speak only as of their dates.
Actual results could differ materially from those projected in the
forward-looking statements as a result of many factors.

ITEM 2.  PROPERTIES.

PROPERTIES RELATING TO OPERATIONS

STEEL PRODUCTION

     All raw steel made by the Company is produced at its Indiana Harbor Works
located in East Chicago, Indiana. The property on which this plant is located,
consisting of approximately 1,900 acres, is held by the Company in fee. The
basic production facilities of the Company at its Indiana Harbor Works consist
of furnaces for making iron; basic oxygen and electric furnaces for making
steel; a continuous billet caster, a continuous combination slab/bloom caster
and two continuous slab casters; and a variety of rolling mills and processing
lines which turn out finished steel mill products. Certain of these production
facilities, including a continuous anneal line, are held by the Company under
leasing arrangements. The Company purchased the equity interest of the lessor of
the No. 2 BOF Shop Caster Facility in 1994. The Company has granted the Pension
Benefit Guaranty Corporation ("PBGC") a lien upon the Caster Facility to secure
the payment of future pension funding obligations. Substantially all of the
remaining property, plant and equipment at the Indiana Harbor Works, other than
the Caster Facility and leased equipment, is subject to the lien of the First
                                        8
<PAGE>   9

Mortgage of the Company dated April 1, 1928, as amended and supplemented. The
Indiana Harbor Works is also subject to a second lien in favor of the United
Steelworkers of America to secure a post retirement health benefit. See
"Operations--Raw Steel Production and Mill Shipments" in Item 1 above for
further information relating to capacity and utilization of the Company's
properties. The Company's properties are adequate to serve its present and
anticipated needs, taking into account those issues discussed in "Capital
Expenditures and Investments in Joint Ventures" in Item 1 above.

     I/N Tek, a partnership in which a subsidiary of the Company owns a 60%
interest, has constructed a 1,600,000 ton annual capacity cold-rolling mill on
approximately 200 acres of land, which it owns in fee, located near New
Carlisle, Indiana. Substantially all the property, plant and equipment owned by
I/N Tek is subject to a lien securing related indebtedness. The I/N Tek facility
is adequate to serve the present and anticipated needs of the Company planned
for such facility.

     I/N Kote, a partnership in which a subsidiary of the Company owns a 50%
interest, has constructed a 900,000 ton annual capacity steel galvanizing
facility on approximately 25 acres of land, which it owns in fee, located
adjacent to the I/N Tek site. Substantially all the property, plant and
equipment owned by I/N Kote is subject to a lien securing related indebtedness.
The I/N Kote facility is adequate to serve the present and anticipated needs of
the Company planned for such facility.

     During 1998, the Company sold its remaining interest in Walbridge Coatings,
but retained the right to use the facility, on a tolling basis, for certain of
its electrogalvanizing and other processing needs through the year 2001.

     PCI Associates, a partnership in which a subsidiary of the Company owns a
50% interest, has constructed a pulverized coal injection facility on land
located within the Indiana Harbor Works. The Company leases PCI Associates the
land upon which the facility is located. Substantially all the property, plant
and equipment owned by PCI Associates is subject to a lien securing related
indebtedness. The PCI Associates facility is adequate to serve the present and
anticipated needs of the Company planned for such facility.

     The Company also owns property at the Indiana Harbor Works used in
connection with its joint project with Sun and NIPSCO. For more information
regarding this project, see the discussion under "Item 1.
Business--Operations--Raw Materials" on page 4 and 5 of this document.

     A subsidiary of the Company owns a fleet of 402 coal hopper cars (100-ton
capacity each) used in unit trains to move coal and coke to the Indiana Harbor
Works. The Company time-charters three vessels for the transportation of iron
ore and limestone on the Great Lakes. During 1998, the Company transferred
ownership of such vessels to a third party subject to a lien in favor of the
PBGC on the vessels to secure the payment of future pension funding obligations.
See "Operations--Raw Materials" in Item 1 above for further information relating
to utilization of the Company's transportation equipment. Such equipment is
adequate, when combined with purchases of transportation services from
independent sources, to meet the Company's present and anticipated
transportation needs.

     The Company also owns and maintains research and development laboratories
in East Chicago, Indiana. Such facilities are adequate to serve its present and
anticipated needs.

RAW MATERIALS PROPERTIES AND INTERESTS

     Certain information relating to raw materials properties and interests of
the Company and its subsidiaries is set forth below. See "Operations--Raw
Materials" in Item 1 above for further information relating to capacity and
utilization of such properties and interests.

                                        9
<PAGE>   10

IRON ORE

     The operating iron ore properties of the Company's subsidiaries and of the
iron ore ventures in which the Company has an interest are as follows:

<TABLE>
<CAPTION>
                                                                               ANNUAL
                                                                        PRODUCTION CAPACITY
                                                                          (IN THOUSANDS OF
PROPERTY                                             LOCATION          GROSS TONS OF PELLETS)
--------                                        -------------------    ----------------------
<S>                                             <C>                    <C>
Empire Mine...................................  Palmer, Michigan               8,400
Minorca Mine..................................  Virginia, Minnesota            2,700
</TABLE>

     The Empire Mine is operated by the Empire Iron Mining Partnership, in which
the Company has a 40% interest. The Company, through a subsidiary, is the sole
owner and operator of the Minorca Mine. The Company has granted the PBGC a lien
on the Minorca Mine property to secure the payment of future pension funding
obligations. The Company also owns a 38% interest in the Butler Taconite project
(permanently closed in 1985) in Nashwauk, Minnesota.

     The reserves at the Empire Mine and Minorca Mine are held under leases
expiring, or expected at current production rates to expire, between 2012 and
2040. The Company's share of the production capacity of its interests in such
iron ore properties is sufficient to provide the majority of its present and
anticipated iron ore pellet requirements. Any remaining requirements have been
and are expected to continue to be readily available from independent sources.

OTHER PROPERTIES

     The Company and one of its subsidiaries lease, under an arrangement,
approximately 20% of the space in the Inland Steel Building located at 30 West
Monroe Street, Chicago, Illinois. The Company's lease agreement expires December
31, 2001. The Company is currently reviewing its options regarding renewal of
this lease. Alternative space is readily available.

     A subsidiary of the Company holds in fee a parcel of 7 acres of land in
Oakbrook Terrace, Illinois, which is for sale. The Company also holds in fee
approximately 300 acres of land adjacent to the I/N Tek and I/N Kote sites,
which land is available for future development. Approximately 1,060 acres of
rural land, which are held in fee at various locations in the north-central
United States by various raw materials ventures, are also for sale.

ITEM 3.  LEGAL PROCEEDINGS.

     The Office of the United States Attorney for the Middle District of
Louisiana (the "U.S. Attorney") had informed the Company that it was a target of
a federal criminal grand jury investigation and one of several defendants in a
civil qui tam lawsuit filed by a private individual on behalf of the government,
alleging violations of the False Claims Act, 31 U.S.C. Section 3729, et seq. The
investigation and the lawsuit related to the sale of polymer coated steel by the
Company to a culvert fabricator for use in federal and state highway
construction projects in Louisiana. Since being notified of the lawsuit and
investigation, Ispat and the Company have provided their complete cooperation
with investigators. On January 17, 2001, to fully resolve this matter, the
Company agreed to a settlement of $15.5 million which is half of the total
settlement among the United States, the state of Louisiana, the relators, and
the defendants.

     All the allegations by the U.S. Attorney relate to events that occurred
prior to the May 27, 1998 execution of the Merger Agreement among Ispat, the
Company, Inland Merger Sub, Inc. and Inland Steel Industries, Inc. (the
predecessor company to Ryerson Tull, Inc.), as amended. Ispat and the Company
have notified Ryerson Tull, Inc. of their intention to seek indemnification and
other remedies, under the Merger Agreement and on other grounds, for the
settlement amount and for all other losses in connection with this matter.

     In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of our business. The Company does not
believe that the adverse determination of any such

                                        10
<PAGE>   11

pending routine litigation, either individually or in the aggregate, will have a
material adverse effect on our business, financial condition, results of
operations, cash flows or prospects.

     On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by a lawsuit
filed by the EPA in 1990 (the "1993 EPA Consent Decree") against, among others,
Inland Steel Company (the "Predecessor Company"). The 1993 EPA Consent Decree
assessed a $3.5 million cash fine, environmentally beneficial projects at the
Indiana Harbor Works, and requires $19 million plus interest to be spent in
remediating sediment in portions of the Indiana Harbor Ship Canal and Indiana
Harbor Turning Basin. The Company has paid the fine and substantially completed
the $7 million project. The Company's reserve for the remaining environmental
obligations under the 1993 EPA Consent Decree totaled $27.3 million as of
December 31, 2000. The 1993 EPA Consent Decree also requires remediation of the
Company's Indiana Harbor Works site. The 1993 EPA Consent Decree establishes a
three-step process, each of which requires approval by the EPA, consisting of:
assessment of the site (including stabilization measures), evaluation of
remediation alternatives and remediation of the site. The Company is presently
assessing the extent of environmental contamination. It is anticipated that this
assessment will cost approximately $2 million to $4 million per year over the
next several years. Because neither the nature and the extent of the
contamination nor the remedial actions can be determined until the first two
steps are completed, the Company cannot presently reasonably estimate the costs
of, or the time required to satisfy, our obligations under the consent decree,
but it is expected that remediation of the site will require significant
expenditures over the next several years that may be material to the Company's
financial position and results of operations. Insurance coverage with respect to
work required under the 1993 EPA Consent Decree is not significant.

     In October 1996, the Indiana Department of Environmental Management, as
lead administrative trustee, notified the Company and other potentially
responsible parties that the natural resource trustees (which also include the
Indiana Department of Natural Resources, the U.S. Department of the Interior,
the Fish and Wildlife Service and the National Park Service) intend to perform a
natural resource damage assessment on the Grand Calumet River and Indiana Harbor
Canal System. The notice states that the Company has been identified as a
potentially responsible party due to alleged releases of hazardous substances
from its Indiana Harbor Works facility. Ispat and the Company have notified
Ryerson Tull, Inc. of their intention to seek indemnification and other remedies
under the May 27, 1998 Merger Agreement among Ispat, the Company, Inland Merger
Sub, Inc. and Inland Steel Industries, Inc. (the predecessor company to Ryerson
Tull, Inc.), as amended, and on other grounds, for any losses in connection with
this matter. At this time, it is not possible to accurately predict the amount
of the Company's potential liability or whether this potential liability could
materially affect our financial position.

     The U.S. Comprehensive Environmental Response, Compensation, and Liability
Act, also known as Superfund, and analogous state laws can impose liability for
the entire cost of cleanup at a site upon any of the current or former owners or
operators or parties who sent waste to the site, regardless of fault or the
lawfulness of the activity that caused the contamination. The Company is a
potentially responsible party at several state and federal Superfund sites.
Except for the Four County Landfill described below, the Company believes its
liability at these sites is either de minimis or substantially resolved. The
Company could, however, incur additional costs or liabilities at these sites if
additional cleanup is required, private parties sue for personal injury or
property damage, or other responsible parties sue for reimbursement of costs
incurred to clean up the sites. The Company could also be named a potentially
responsible party at other sites if its wastes or its predecessors generated
were disposed of at a site that later became a Superfund site.

     The Company received a Special Notice of Potential Liability from the
Indiana Department of Environmental Management on February 18, 1992 relating to
releases of hazardous substances from the Four County Landfill Site in Fulton
County, Indiana. In August 1993, the Company along with other potentially
responsible parties, entered into an agreed order with the Indiana Department of
Environmental Management pursuant to which the potentially responsible parties
agreed to perform a remedial investigation and feasibility study for the Four
County Landfill Site, pay certain past and future Indiana Department of
Environmental Management costs, and provide funds for operation and maintenance
necessary for stabilization of the Four County Landfill Site. The costs which
the Company has agreed to assume under the agreed order are not currently
anticipated to exceed $700,000. The final remedy will not be selected until the
remedial investigation
                                        11
<PAGE>   12

and feasibility study is completed. The Company is therefore unable to
reasonably estimate its remaining liability, if any, at this site, but based on
the allocated share of liability and the number of financially viable
potentially responsible parties, the Company believes this matter will not have
a material adverse effect on our financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

     The Company is an indirect wholly owned subsidiary of Ispat. Common stock
dividends of $8.3 million were declared and paid during 2000. In connection with
the acquisition, an affiliate of the Company entered into a credit agreement
dated July 16, 1998 (the "Credit Agreement") for a $860 million senior secured
term credit facility. The terms of the Credit Agreement restricts the payment of
dividends and other Restricted Payments (as defined in the Credit Agreement). At
December 31, 2000, $6.4 million of dividends or other Restricted Payments could
have been paid.

ITEM 6.  SELECTED FINANCIAL DATA.

     The Company meets the conditions set forth in General Instruction I(2)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS.

     On July 16, 1998, Ispat acquired Inland Steel Company (the "Predecessor
Company") from Inland Steel Industries, Inc. ("Industries") in accordance with
an Agreement and Plan of Merger ("Agreement"), dated as of May 27, 1998, amended
as of July 16, 1998 (the "Acquisition"). The Predecessor Company was renamed
Ispat Inland Inc. on September 1, 1998. Ispat paid $1,143.1 million, plus an
assumption of certain liabilities or obligations, to acquire the Predecessor
Company.

     As a result of the Acquisition, the capital structure and accounting basis
of the assets and liabilities of the Company after July 16, 1998 differ from
those of the Predecessor Company in prior periods. Financial data of the
Predecessor Company for periods prior to and through July 16, 1998 are presented
on a historical cost basis. Financial data of the Company thereafter reflects
the Acquisition under the purchase method of accounting, under which the
purchase price has been allocated to assets and liabilities based upon their
estimated fair values.

     The following table summarizes selected earnings and other data:

<TABLE>
<CAPTION>
                                                                2000        1999
                                                              --------    --------
                                                               (DOLLARS AND TONS
                                                                  IN MILLIONS)
<S>                                                           <C>         <C>
Net sales...................................................  $2,305.3    $2,392.5
Operating profit............................................      35.8       141.9
Net (loss) income...........................................     (32.9)       36.0
Net tons shipped............................................       5.6         5.8
</TABLE>

     Net sales in 2000 of $2,305.3 million were 3.6 percent less than net sales
of $2,392.5 million in 1999. The decrease in sales was due to a decrease in
shipments of 3.4 percent, and a decrease of 0.2 percent in average realizing
prices. The reduction in prices resulted mainly from the increase in imports,
partially offset by the improved mix of products sold.

                                        12
<PAGE>   13

     Cost of goods sold (excluding depreciation) of $2,107.5 million increased
0.3 percent for 2000, with the effect of a decrease in volume shipped being
offset by an increase in spending for labor costs, energy, and purchased
materials during 2000.

     Depreciation expense of $106.0 million decreased $0.3 million or 0.3
percent from $106.3 million in the prior year.

     Selling, general and administrative expense of $40.4 million decreased 5.6
percent from $42.8 million in the year-ago period due to decreased spending.

     Operating profit decreased to $35.8 million compared to $141.9 million a
year ago as a result of the items noted above.

     General corporate expense, net of income items of $(2.3) million decreased
by $3.0 million from $0.7 million in 1999 due to increased interest and other
income as well as decreased corporate expenses.

     Interest expense of $97.2 million in 2000 increased by $11.0 million from
$86.2 in 1999 due to an increase in the debt balance and interest rate changes.

     In connection with the financing of the Acquisition, an affiliate of the
Company, Ispat Inland, L.P. (the "Borrower"), entered into a Credit Agreement
dated July 16, 1998 (the "Credit Agreement") for a senior secured term credit
facility and letter of credit with a syndicate of financial institutions. The
Credit Agreement consists of a $350 Tranche B Term Loan due July 16, 2005 (the
"Tranche B Loan"), a $350 Tranche C Term Loan due July 16, 2006 (the "Tranche C
Loan" and together with the Tranche B Loan, the "Term Loans") and a $160 letter
of credit extending to July 9, 2003, (the "LC" and together with the Term Loans,
the "Facilities"). Under terms of the Credit Agreement, the Company must, among
other things, maintain a minimum Consolidated EBITDA (as defined in the Credit
Agreement). The Company has amended the Credit Agreement, effective March 30,
2001, to eliminate the minimum Consolidated EBITDA requirement for 2001 and
allow the Company to include loans or capital contributions from Ispat as EBITDA
in determining compliance with the covenant in future periods. Under terms of
the amendment, the interest rates on the Tranche B and Tranche C loans will
increase to LIBOR plus 3.75% and the fee for the LC will increase to 3.75%.
These rates will be reduced if the Company's leverage falls to specified levels.
The amendment also provides for some additional restrictions over certain
activities. Finally, Ispat agreed to lend or contribute $60 million to the
Company at the execution of the amendment, in addition to the $50 million funded
earlier in the first quarter. This $110 million cannot be repaid until the
Company's leverage falls to specified levels.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company had $1,092.6 million of long-term debt (including debt due
within one year) outstanding at December 31, 2000. Of this amount, $834.5
million is floating rate debt. The remaining $258.1 million of fixed rate debt
had a fair value of $181.5 million. Assuming a hypothetical 10% decrease in
interest rates at December 31, 2000, the fair value of this fixed rate debt
would be estimated to be $194.9 million. Fair market values are based upon
market prices or current borrowing rates with similar rates and maturities.

     The Company utilizes derivative commodity instruments not for trading
purposes but to hedge exposure to fluctuations in the costs of natural gas and
certain nonferrous metal commodities. A hypothetical 10% decrease in commodity
prices for open derivative commodity instruments as of December 31, 2000 would
reduce pre-tax income by $7.5 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The consolidated financial statements (including the financial statement
schedules listed under Item 14(a)1 of this report) of the Successor Company
called for by this Item, together with the Independent Auditors' Report dated
January 18, 2001 are set forth on pages F-2 to F-24 inclusive, of this Report on

                                        13
<PAGE>   14

Form 10-K, and are hereby incorporated by reference into this Item. Consolidated
financial statements (including the financial statement schedules listed under
Item 14(a)1 of this report) of the Predecessor Company called for by this Item,
together with the Report of Independent Accountants dated January 8, 1999, are
set forth on pages F-25 to F-34 inclusive, of this Report on Form 10-K, and are
hereby incorporated by reference into this Item. Financial statement schedules
not included in this Report on Form 10-K have been omitted because they are not
applicable or because the information called for is shown in the consolidated
financial statements or notes thereto.

     Consolidated quarterly sales and earnings information of the Successor
Company for the years ended December 31, 2000 and 1999 is set forth in Note 16
of Notes to Consolidated Financial Statements (see F-23), which is hereby
incorporated by reference into this Item. Consolidated quarterly sales and
earnings information of the Predecessor Company for the period from January 1,
1998 through July 16, 1998 is set forth in Note 13 of Notes to Consolidated
Financial Statements (see F-33), which is hereby incorporated by reference into
this Item.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 11.  EXECUTIVE COMPENSATION.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

                                        14
<PAGE>   15

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (a) DOCUMENTS FILED AS A PART OF THIS REPORT.

          1. CONSOLIDATED FINANCIAL STATEMENTS. The consolidated financial
     statements listed below are set forth on pages F-2 to F-34 inclusive, of
     this Report and are incorporated by reference in Item 8 of this Annual
     Report on Form 10-K.

             Independent Auditors' Report dated January 18, 2001

             Consolidated Statements of Operations and Consolidated Statements
        of Comprehensive Income for the years ended December 31, 2000 and 1999,
        and the period from July 17, 1998 through December 31, 1998--Successor
        Company

             Consolidated Statements of Cash Flows for the years ended December
        31, 2000 and 1999, and the period from July 17, 1998 through December
        31, 1998--Successor Company

             Consolidated Balance Sheets at December 31, 2000 and
        1999--Successor Company

             Consolidated Statements of Stockholders' Equity for the years ended
        December 31, 2000 and 1999--Successor Company

             Notes to Consolidated Financial Statements--Successor Company

             Financial Statement Schedule II (Reserves) for the years ended
        December 31, 2000 and 1999, and the period from July 17, 1998 through
        December 31, 1998--Successor Company

             Report of Independent Accountants dated January 8, 1999

             Consolidated Statements of Operations and Reinvested Earnings for
        the period from January 1, 1998 through July 16, 1998--Predecessor
        Company

             Consolidated Statements of Cash Flows for the period from January
        1, 1998 through July 16, 1998--Predecessor Company

             Statement of Accounting and Financial Policies--Predecessor Company

             Notes to Consolidated Financial Statements--Predecessor Company

             Financial Statement Schedule II (Reserves) for the period from
        January 1, 1998 through July 16, 1998--Predecessor Company

          2. EXHIBITS. The exhibits required to be filed by Item 601 of
     Regulation S-K are listed in the "Exhibit Index," which is attached hereto
     and incorporated by reference herein.

     (b) REPORTS ON FORM 8-K.

          No reports on Form 8-K were filed by the Company during the quarter
     ended December 31, 2000. The Company filed a report on Form 8-K on January
     24, 2001 regarding the settlement of a federal lawsuit and investigation
     relating to the sale by the Company of polymer-coated steel in Louisiana.
     This matter is discussed under "Part I--Item 3--Legal Proceedings."

                                        15
<PAGE>   16

                                     INDEX

                                       TO

                       CONSOLIDATED FINANCIAL STATEMENTS

                                       OF

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES
                              (SUCCESSOR COMPANY)

                                      AND

                 INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES
                             (PREDECESSOR COMPANY)

<TABLE>
<CAPTION>
                            ITEM                              PAGE
                            ----                              ----
<S>                                                           <C>
Independent Auditors' Report dated January 18, 2001.........   F-2
Consolidated Statements of Operations and Consolidated
  Statements of Comprehensive Income for the years ended
  December 31, 2000 and 1999 and the period from July 17,
  1998 through December 31, 1998--Successor Company.........   F-3
Consolidated Statements of Cash Flows for the years ended
  December 31, 2000 and 1999 and the period from July 17,
  1998 through December 31, 1998--Successor Company.........   F-4
Consolidated Balance Sheets at December 31, 2000 and
  1999--Successor Company...................................   F-5
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 2000 and 1999--Successor
  Company...................................................   F-6
Notes to Consolidated Financial Statements--Successor
  Company...................................................   F-7
Financial Statement Schedule II (Reserves) for the years
  ended December 31, 2000 and 1999 and the period from July
  17, 1998 through December 31, 1998--Successor Company.....  F-24
Report of Independent Accountants dated January 8, 1999.....  F-25
Consolidated Statements of Operations and Reinvested
  Earnings for the period from January 1, 1998 through July
  16, 1998 Predecessor Company..............................  F-26
Consolidated Statements of Cash Flows for the period from
  January 1, 1998 through July 16, 1998--Predecessor
  Company...................................................  F-27
Statement of Accounting and Financial Policies--Predecessor
  Company...................................................  F-28
Notes to Consolidated Financial Statements--Predecessor
  Company...................................................  F-29
Financial Statement Schedule II (Reserves) for the period
  from January 1, 1998 through July 16, 1998--Predecessor
  Company...................................................  F-34
</TABLE>

                                       F-1
<PAGE>   17

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
  ISPAT INLAND INC.:

     We have audited the accompanying consolidated balance sheets of Ispat
Inland Inc. and its subsidiaries (the "Successor Company") as of December 31,
2000 and 1999, and the related consolidated statements of operations,
comprehensive income, stockholders' equity and cash flows for the years then
ended and for the period July 17, 1998 through December 31, 1998. Our audits
also included the financial statement schedule II as of December 31, 2000 and
1999 and for the years then ended and for the period July 17, 1998 through
December 31, 1998 listed at Item 14a. These financial statements and schedule
are the responsibility of the Successor Company's management. Our responsibility
is to express an opinion on the financial statements and financial statement
schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Successor Company at
December 31, 2000 and 1999, and the consolidated results of their operations and
their cash flows for the years then ended and the period July 17, 1998 through
December 31, 1998 in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule as of December 31, 2000 and 1999 and for the years then ended and the
period July 17, 1998 through December 31, 1998, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

Deloitte & Touche LLP

Chicago, Illinois
January 18, 2001 (March 30, 2001 as to paragraph 11 in Note 5)

                                       F-2
<PAGE>   18

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                              PERIOD FROM
                                                  YEAR ENDED           YEAR ENDED        JULY 17, 1998 THROUGH
                                               DECEMBER 31, 2000    DECEMBER 31, 1999      DECEMBER 31, 1998
                                               -----------------    -----------------    ---------------------
                                                                    (DOLLARS IN MILLIONS)
<S>                                            <C>                  <C>                  <C>
Net sales..................................        $2,305.2             $2,392.5               $1,075.4
Operating costs and expenses:
  Cost of goods sold (excluding
     depreciation).........................         2,107.5              2,101.5                  952.2
  Legal settlement.........................            15.5                   --                     --
  Selling, general and administrative
     expenses..............................            40.4                 42.8                   15.9
  Depreciation.............................           106.0                106.3                   46.8
                                                   --------             --------               --------
     Total.................................         2,269.4              2,250.6                1,014.9
                                                   --------             --------               --------
Operating profit...........................            35.8                141.9                   60.5
Other (income) and expense:
  General corporate expense, net of income
     items.................................            (2.3)                 0.7                    2.6
  Interest and other expense on debt.......            97.2                 86.2                   41.1
                                                   --------             --------               --------
(Loss) Income before income taxes..........           (59.1)                55.0                   16.8
(Benefit) Provision for income taxes.......           (25.5)                19.0                    4.5
                                                   --------             --------               --------
Net (loss) income before extraordinary
  income...................................           (33.6)                36.0                   12.3
Gain on early extinguishment of debt, net
  of tax...................................             0.7                   --                     --
                                                   --------             --------               --------
Net (loss) income..........................        $  (32.9)            $   36.0               $   12.3
                                                   ========             ========               ========
</TABLE>

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                                              PERIOD FROM
                                                  YEAR ENDED           YEAR ENDED        JULY 17, 1998 THROUGH
                                               DECEMBER 31, 2000    DECEMBER 31, 1999      DECEMBER 31, 1998
                                               -----------------    -----------------    ---------------------
                                                                    (DOLLARS IN MILLIONS)
<S>                                            <C>                  <C>                  <C>
Net (loss) income..........................         $(32.9)               $36.0                  $12.3
Other comprehensive (loss) income, net of
  tax:
  Unrealized (loss) gain on securities.....           (1.1)                 0.8                   (0.1)
  Minimum pension liability adjustment.....          (31.6)                 0.5                   (0.7)
                                                    ------                -----                  -----
     Total.................................          (32.7)                 1.3                   (0.8)
                                                    ------                -----                  -----
Comprehensive (loss) income................         $(65.6)               $37.3                  $11.5
                                                    ======                =====                  =====
</TABLE>

                 See Notes to Consolidated Financial Statements
                                       F-3
<PAGE>   19

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                   PERIOD FROM
                                                         YEAR ENDED          YEAR ENDED       JULY 17, 1998 THROUGH
                                                      DECEMBER 31, 2000   DECEMBER 31, 1999     DECEMBER 31, 1998
                                                      -----------------   -----------------   ---------------------
                                                                          (DOLLARS IN MILLIONS)
<S>                                                   <C>                 <C>                 <C>
OPERATING ACTIVITIES
  Net (loss) income.................................      $   (32.9)           $  36.0              $    12.3
  Adjustments to reconcile net income to net cash
    from operating activities:
    Gain from early extinguishment of debt..........           (1.6)                --                     --
    Depreciation....................................          106.0              106.3                   46.8
    Deferred employee benefit cost..................          (50.5)             (43.1)                 (19.5)
    Amortization of debt premium....................           (1.6)              (1.5)                  (0.7)
    Undistributed earnings from joint ventures......          (18.7)             (25.5)                  (9.8)
    Gain on sale of property, plant and equipment...           (0.6)              (0.3)                    --
    Deferred income taxes...........................          (11.4)               7.4                   (2.5)
    Change in:
      Receivables...................................           51.4              (20.0)                 (25.1)
      Inventories...................................            6.5               73.1                  (47.6)
      Accounts payable..............................           (1.5)              54.3                   12.2
      Prepaid expenses and other assets.............          (25.8)             (20.0)                 (25.1)
      Payables to/receivables from related
         companies..................................            6.9              (28.3)                  29.6
      Other accrued liabilities.....................            2.6              (20.7)                  (1.8)
    Other items.....................................           (0.3)             (23.4)                   6.8
                                                          ---------            -------              ---------
      Net adjustments...............................           61.4               58.3                  (36.7)
                                                          ---------            -------              ---------
      Net cash from operating activities............           28.5               94.3                  (24.4)
                                                          ---------            -------              ---------
INVESTING ACTIVITIES
  Capital expenditures..............................          (83.0)             (55.1)                 (24.7)
  Investments in and advances to joint ventures,
    net.............................................            7.8               15.0                    2.7
  Proceeds from sale of property, plant and
    equipment.......................................            2.0                1.5                     --
  Payments for acquisition..........................             --                 --               (1,143.1)
                                                          ---------            -------              ---------
      Net cash from investing activities............          (73.2)             (38.6)              (1,165.1)
                                                          ---------            -------              ---------
FINANCING ACTIVITIES
  Proceeds from sale of common stock................             --                 --                  320.0
  Proceeds from sale of preferred stock.............             --                 --                   90.0
  Long-term debt issued.............................             --                 --                  707.7
  Long-term debt retired............................             --                 --                   (8.5)
  Principal payments on long-term debt..............          (19.9)             (17.2)                    --
  Proceeds from note receivable from related
    company.........................................            4.0                2.0                    0.3
  Dividends paid....................................          (15.4)             (10.5)                    --
  Bank overdrafts...................................          (22.1)              24.4                   17.8
  Proceeds from revolver borrowings.................        2,046.0              582.0                     --
  Repayments of revolver borrowings.................       (1,937.0)            (639.0)                  50.0
                                                          ---------            -------              ---------
      Net cash from financing activities............           55.6              (58.3)               1,177.3
                                                          ---------            -------              ---------
Net change in cash and cash equivalents.............           10.9               (2.6)                 (12.2)
Cash and cash equivalents--beginning of
  year/period.......................................           13.1               15.7                   27.9
                                                          ---------            -------              ---------
Cash and cash equivalents--end of year/period.......      $    24.0            $  13.1              $    15.7
                                                          =========            =======              =========
SUPPLEMENTAL DISCLOSURES
  Cash paid during the year/period for:
    Interest (net of amount capitalized)............      $    85.9            $  97.4              $    29.5
    Income taxes, net...............................      $      --            $  27.6              $      --
    Non-cash activity:
      Deferred taxes related to comprehensive (loss)
         income items...............................      $    18.6            $   0.6              $     0.4
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       F-4
<PAGE>   20

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                DECEMBER 31, 2000        DECEMBER 31, 1999
                                                                ------------------       ------------------
                                                                (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA)
<S>                                                             <C>                      <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................         $   24.0                 $   13.1
  Receivables, less provision for allowances, claims and
    doubtful accounts of $17.0 and $18.6....................            210.0                    261.4
  Inventories...............................................            532.5                    539.0
  Prepaid expenses and other................................             14.4                      9.0
  Deferred income taxes.....................................             25.4                     17.9
                                                                     --------                 --------
    Total current assets....................................            806.3                    840.4
Investments in and advances to joint ventures...............            249.1                    240.2
Property, plant and equipment, net..........................          1,882.1                  1,906.5
Receivables from related companies..........................              8.6                      9.6
Pension intangible asset....................................             89.0                       --
Other assets................................................             87.1                     66.7
                                                                     --------                 --------
    Total Assets............................................         $3,122.2                 $3,063.4
                                                                     ========                 ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................         $  237.8                 $  239.3
  Bank overdrafts...........................................             20.1                     42.2
  Borrowings under Revolving Credit Facilities..............               --                     43.0
  Payables to related companies.............................             12.0                      2.1
  Accrued expenses and other liabilities:
    Salaries, wages and commissions.........................             53.4                     56.7
    Taxes...................................................             68.8                     68.5
    Interest on debt........................................              4.3                      4.4
    Other...................................................             36.1                     30.4
Long-term debt due within one year
  Related companies.........................................              7.0                      7.0
  Other.....................................................               --                      1.0
                                                                     --------                 --------
      Total current liabilities.............................            439.5                    494.6
Long-term debt:
  Related companies.........................................            675.5                    682.5
  Other.....................................................            410.1                    273.2
Deferred employee benefits..................................          1,180.8                  1,093.1
Deferred income taxes.......................................              0.7                     23.0
Other long-term obligations.................................             48.3                     48.7
                                                                     --------                 --------
    Total liabilities.......................................          2,754.9                  2,615.1
                                                                     --------                 --------
Commitments and contingencies (Note 11)
Stockholders' equity
  Preferred stock, $.01 par value, 100 shares authorized,
    100 shares issued and outstanding, liquidation value
    $90.....................................................             90.0                     90.0
  Common stock, $.01 par value, 1,000 shares authorized, 100
    shares issued and outstanding...........................            320.0                    320.0
  (Accumulated deficit) Retained earnings...................            (10.5)                    37.8
  Accumulated other comprehensive (loss) income.............            (32.2)                     0.5
                                                                     --------                 --------
      Total stockholders' equity............................            367.3                    448.3
                                                                     --------                 --------
      Total liabilities and stockholders' equity............         $3,122.2                 $3,063.4
                                                                     ========                 ========
</TABLE>

                 See Notes to Consolidated Financial Statements
                                       F-5
<PAGE>   21

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                  ACCUMULATED
                                                                 (ACCUMULATED        OTHER
                                                                   DEFICIT)      COMPREHENSIVE        TOTAL
                                          PREFERRED    COMMON      RETAINED         (LOSS)        STOCKHOLDERS'
                                            STOCK      STOCK       EARNINGS         INCOME           EQUITY
                                          ---------    ------    ------------    -------------    -------------
                                                                  (DOLLARS IN MILLIONS)
<S>                                       <C>          <C>       <C>             <C>              <C>
Initial capitalization at July 17,
  1998................................      $90.0      $320.0       $   --          $   --           $410.0
Net income............................         --         --          12.3              --             12.3
Other comprehensive income............         --         --            --            (0.8)            (0.8)
                                            -----      ------       ------          ------           ------
Balance at December 31, 1998..........      $90.0      $320.0       $ 12.3          $ (0.8)          $421.5
Net income............................         --         --          36.0              --             36.0
Dividend paid.........................         --         --         (10.5)                           (10.5)
Other comprehensive income............         --         --            --             1.3              1.3
                                            -----      ------       ------          ------           ------
Balance at December 31, 1999..........       90.0      320.0          37.8             0.5            448.3
Net loss..............................         --         --         (32.9)             --            (32.9)
Dividend paid.........................         --         --         (15.4)             --            (15.4)
Other comprehensive loss..............         --         --            --           (32.7)           (32.7)
                                            -----      ------       ------          ------           ------
Balance at December 31, 2000..........      $90.0      $320.0       $(10.5)         $(32.2)          $367.3
                                            =====      ======       ======          ======           ======
</TABLE>

                 See Notes to Consolidated Financial Statements
                                       F-6
<PAGE>   22

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 1--THE ACQUISITION

     On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel
Company ("Predecessor Company") from Inland Steel Industries, Inc.
("Industries") in accordance with an Agreement and Plan of Merger ("Agreement"),
dated as of May 27, 1998, amended as of July 16, 1998 (the "Acquisition").
Inland Steel Company was renamed Ispat Inland Inc. ("Successor Company" or the
"Company") on September 1, 1998. The Predecessor Company was acquired for
$1,143.1 plus the assumption of certain liabilities or obligations.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The capital structure and accounting basis of the assets and liabilities of
the Company as of July 17, 1998 and thereafter differ from those of the
Predecessor Company in prior periods as a result of the Acquisition. The
Acquisition was accounted for under the purchase method of accounting in
accordance with Accounting Principles Board Opinion ("APB") No. 16, "Accounting
for Business Combinations." The total purchase price has been allocated to
assets and liabilities of the Company based on their respective fair values.

CONSOLIDATION POLICY

     The consolidated financial statements include the accounts of the Company
and all significant subsidiaries. Intercompany transactions have been eliminated
in consolidation.

ACCOUNTING FOR EQUITY INVESTMENTS

     The Company's investments in less than majority-owned companies, joint
ventures and partnerships, and the Company's majority interest in the I/N Tek
(See Note 13) partnership are accounted for under the equity method.

INVENTORY VALUATION

     Inventories are carried at the lower of cost or market. Cost is principally
determined on a first-in, first-out ("FIFO") method. Costs include the purchase
costs of raw materials, conversion costs, and an allocation of fixed and
variable production overhead.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost and depreciated using the
straight line method over the useful lives of the related assets, ranging from
25 to 45 years for buildings and 2 to 21.5 years for machinery and equipment.
Major improvements which add to productive capacity or extend the life of an
asset are capitalized while repairs and maintenance are charged to expense as
incurred. The carrying amount for long-lived assets is reviewed whenever events
or changes in circumstances indicate that an impairment may have occurred.

CASH EQUIVALENTS

     Cash equivalents are highly liquid, short-term investments purchased with
original maturities of three months or less when acquired.

DEFERRED FINANCING COSTS

     Deferred financing costs are amortized over the expected terms of the
related debt.

                                       F-7
<PAGE>   23
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

STOCK OPTION PLAN

     In 1999, Ispat established the Ispat International N.V. Global Stock Option
Plan (the "Ispat Plan"). Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation" encourages, but does not
require companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company, which participates in the Ispat
Plan, has chosen to account for stock options issued to employees using the
intrinsic value method prescribed in APB No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations (See Note 7). Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted market
price of the underlying Ispat stock at the date of the grant over the exercise
price of the employee stock options. For disclosure purposes, proforma net
income is provided as if the fair value method had been applied. The Company has
adopted the disclosure requirements of SFAS No. 123.

REVENUE RECOGNITION

     Sales are recognized when the Company's products are shipped to customers.

INCOME TAXES

     Income tax expense is based upon reported results of operations and
reflects the impact of temporary differences between the amount of assets and
liabilities recognized for financial reporting purposes and such amounts
recognized for tax purposes.

DERIVATIVES

     Derivative financial instruments are utilized to manage exposure to
fluctuations in cost of natural gas and specific nonferrous metals used in the
production process. The use of these financial instruments is intended for
hedging purposes. Gains or losses are recognized as part of the cost of the
underlying product or service when the contracts are closed.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to financial statements. Actual results may differ
from such estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for all fiscal years beginning after June 15, 2000.
SFAS No. 133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. Under SFAS No. 133, certain
contracts that were not formerly considered derivatives may now meet the
definition of a derivative. The Company adopted SFAS No. 133 effective January
1, 2001 and has concluded that the adoption of SFAS No. 133 had a deminimis
impact on the financial position, results of operations, and cash flows of the
Company.

                                       F-8
<PAGE>   24
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 3--INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
In-process and finished steel...............................    $  362.7       $  329.9
Raw materials and supplies:
  Iron ore..................................................        77.8          101.2
  Scrap and other raw materials.............................        56.1           70.6
  Supplies..................................................        35.9           37.3
                                                                --------       --------
                                                                   169.8          209.1
                                                                --------       --------
     Total..................................................    $  532.5       $  539.0
                                                                ========       ========
</TABLE>

     As a result of the Acquisition, inventories were recorded at their fair
value at July 17, 1998. Such fair value for finished goods and work in process
represented selling price less estimated costs of completion, selling costs and
a reasonable profit allowance for the selling and completion effort. Raw
materials were valued at replacement cost. The fair value of inventories was in
excess of their inventoriable cost which resulted in a one-time charge to cost
of goods sold during the period July 17, 1998 through December 31, 1998 of
$20.7.

NOTE 4--PROPERTY, PLANT AND EQUIPMENT, NET

     Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
Land........................................................    $   46.5       $   46.5
Buildings and improvements..................................       191.9          191.2
Machinery and equipment.....................................     1,858.0        1,797.8
Construction in process.....................................        44.1           24.1
                                                                --------       --------
                                                                 2,140.5        2,059.6
Accumulated depreciation....................................       258.4          153.1
                                                                --------       --------
Property, plant and equipment, net..........................    $1,882.1       $1,906.5
                                                                ========       ========
</TABLE>

                                       F-9
<PAGE>   25
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 5--LONG-TERM DEBT

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,    DECEMBER 31,
                                                                    2000            1999
                                                                ------------    ------------
<S>                                                             <C>             <C>
First Mortgage Bonds:
  Series U, Tranche B, due July 16, 2005....................      $  341.3         $344.8
  Series U, Tranche C, due July 16, 2006....................         341.3          344.8
  Series R, 7.9% due January 15, 2007.......................          43.4           56.4
  Pollution Control Series 1977, 5.75% due February 1,
     2007...................................................          22.8           24.8
  Pollution Control Series 1993, 6.8% due June 1, 2013......          43.8           44.1
  Pollution Control Series 1995, 6.85% due December 1,
     2012...................................................          18.6           18.8
                                                                  --------         ------
     Total First Mortgage Bonds.............................         811.2          833.7
Obligations for Industrial Development Revenue Bonds:
  Pollution Control Project No. 11, 7.125% due June 1,
     2007...................................................          21.7           21.9
  Pollution Control Project No. 13, 7.25% due November 1,
     2011...................................................          42.3           42.7
  Exempt Facilities Project No. 14, 6.7% due November 1,
     2012...................................................           5.5            5.5
  Exempt Facilities Project No. 15, 5.75% due October 1,
     2011...................................................          52.2           52.2
  Exempt Facilities Project No. 16, 7% due January 1,
     2014...................................................           7.7            7.7
                                                                  --------         ------
     Total Obligations for Industrial Development Revenue
       Bonds................................................         129.4          130.0
                                                                  --------         ------
  Ispat Inland Administrative Service Company revolving
     credit facility........................................          92.0             --
  Ispat Inland Inventory, LLC revolving credit facility.....          60.0             --
  Less short-term portion...................................           7.0            8.0
                                                                  --------         ------
  Total long-term debt......................................      $1,085.6         $955.7
                                                                  ========         ======
</TABLE>

     In connection with the financing of the Acquisition, an affiliate of the
Company, Ispat Inland, L.P. (the "Borrower"), entered into a Credit Agreement
dated July 16, 1998 (the "Credit Agreement") for a senior secured term credit
facility and letter of credit with a syndicate of financial institutions for
whom Credit Suisse First Boston is the agent (the "Agent"). The Credit Agreement
consists of a $350 Tranche B Term Loan due July 16, 2005 (the"Tranche B Loan"),
a $350 Tranche C Term Loan due July 16, 2006 (the "Tranche C Loan" and together
with the Tranche B Loan, the "Term Loans") and a $160 letter of credit extending
to July 9, 2003, (the "LC" and together with the Term Loans, the "Facilities").
The LC has not been drawn upon. Each of the Tranche B Loan and Tranche C Loan
has scheduled principal repayments of $.875 per quarter until maturity. The
lenders are committed to renewing the LC annually for five years, contingent on
the Company and Borrower making certain representations and warranties.

     On July 16, 1998, the Company issued $875 of First Mortgage Bonds as
security both for the Facilities and for an interest rate hedge (not as defined
under SFAS No. 133) owned by the Borrower as required under the Credit Agreement
(the "Hedge"). Series U, in a principal amount of $700, was issued to an
indirect subsidiary of the Borrower which, in turn, pledged the Bonds to the
Agent for the benefit of the Term Loan lenders. Series V, in a principal amount
of $160, was issued to the Agent for the benefit of the LC lenders. Series W, in
a principal amount of $15, was issued to the Agent for the benefit of the
counterparty to the Hedge.

     As a further credit enhancement under the Credit Agreement, the Facilities
and the Hedge are fully and unconditionally guaranteed by the Company, certain
subsidiaries of the Company and Ispat.

                                       F-10
<PAGE>   26
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 5--LONG-TERM DEBT--(CONTINUED)

     Borrowings under the Term Loans bear interest at a rate per annum equal to,
at the Borrower's option: (1) the higher of (a) the Agent's prime rate or (b)
the rate which is 1/2 of 1% in excess of the Federal Funds effective rate
(together the "Base Rate"), plus 1.25% for Tranche B Loans and 1.75% for Tranche
C Loans or (2) the LIBO Rate (as defined in the Credit Agreement) plus 2.25% for
Tranche B Loans and 2.75% for Tranche C Loans. The fee for the LC is 2.25% of
the LC amount per annum (the "LC Fee"). The spread over over the LIBO Rate and
Base Rate and the LC Fee will be reduced if the Company's Consolidated Leverage
Ratio (as defined in the Credit Agreement) falls to specified levels.

     In October 1998, the Borrower entered into the Hedge required under the
Credit Agreement. The Hedge consists of a five-year interest rate collar. The
Hedge is based on LIBOR with a floor of 4.50% and a ceiling of 6.26% on a
notional amount of $450.

     The Company is obligated to pay interest on the Series U First Mortgage
Bonds at the rate paid by the Borrower to the Term Loan lenders, plus 1/2 of 1%
per annum and on the Series V First Mortgage Bonds at a rate equal to the LC
Fee. The rate of interest paid on the Series U First Mortgage Bonds to a related
company was 9.6% for the year ended December 31, 2000.

     With the exception of Series U, V and W, the First Mortgage Bonds are the
obligation solely of the Company and have not been guaranteed or assumed by or,
otherwise, become the obligation of Ispat or any of its other subsidiaries. Each
series of First Mortgage Bonds issued by the Company is limited to the principal
amount outstanding, with the Pollution Control Series 1977 Bonds and the Series
R First Mortgage Bonds subject to a sinking fund. A substantial portion of the
property, plant and equipment owned by the Company at its Indiana Harbor Works
is subject to the lien of the First Mortgage. This property had a book value of
approximately $1,700 on December 31, 2000 and 1999.

     The Credit Agreement restricts the payment of dividends and other
Restricted Payments (as defined in the Credit Agreement) to 50% of Consolidated
Net Income (as defined in the Credit Agreement) plus certain specifically
allowed types of Restricted Payments. At December 31, 2000 and 1999, $6.4 and
$11.5, respectively, of dividends or other Restricted Payments, in addition to
those specifically allowed, could have been paid.

     The Credit Agreement contains other covenants that, among other things,
limit or prohibit the ability of the Company or the Borrower to incur
indebtedness, create liens, engage in transactions with affiliates, sell assets
and engage in mergers and consolidations.

     The Company must also maintain a minimum Consolidated EBITDA (as defined in
the Credit Agreement). The Company has amended the Credit Agreement, effective
March 30, 2001, to eliminate the minimum Consolidated EBITDA requirement for
2001 and allow the Company to include loans or capital contributions from Ispat
as EBITDA in determining compliance with the covenant in future periods. Under
terms of the amendment, the interest rates on the Tranche B and Tranche C loans
will increase to LIBOR plus 3.75% and the fee for the LC will increase to 3.75%.
These rates will be reduced if the Company's leverage falls to specified levels.
The amendment also provides for some additional restrictions over certain
activities. Finally, Ispat agreed to lend or contribute $60 million to the
Company at the execution of the amendment, in addition to the $50 million funded
earlier in the first quarter. This $110 million cannot be repaid until the
Company's leverage falls to specified levels.

     Ispat Inland Administrative Service Company ("IIASC"), a wholly owned
subsidiary of the Company established to provide a supplemental source of funds
to the Company, has a committed revolving credit facility with a group of banks.
In November 2000, the facility was increased in size to $165 and extended to

                                       F-11
<PAGE>   27
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 5--LONG-TERM DEBT--(CONTINUED)

November of 2005. The Company has agreed to sell substantially all of its
receivables to IIASC to secure this facility. Provisions of the credit agreement
limit or prohibit the Company from merging, consolidating, or selling its assets
and require IIASC to meet minimum net worth and leverage ratio tests.

     In 1999, the Company established a five-year $120 committed revolving
credit facility with a group of banks. The Company has agreed to sell
substantially all of its raw material, in-process and finished goods inventory
to Ispat Inland Inventory, LLC ("III"), a wholly owned subsidiary of the
Company, to secure this facility. Provisions of the credit agreement require III
to maintain a minimum net worth.

     At December 31, 2000, the amount outstanding under both the IIASC and III
revolving credit facilities were shown as a long term obligation. The Company
has the ability and intent to refinance these obligations as they mature under
the respective credit agreements. At December 31, 1999, the revolver debt of
$43.0 was classified as a short-term obligation since the amount outstanding was
attributable to the IIASC facility and this facility had an expiration date of
November 30, 2000.

     In May 2000, the Company purchased $12.5 of its Series R Bonds at a
discount from face value. As a result of this early redemption, the Company
recognized a gain of $1.5 of which $1.0 was classified as extraordinary ($0.7
after tax).

     Maturities of long-term debt obligations are: $7.0 in 2001, $8.0 in 2002,
$10.9 in 2003, $73.8 in 2004, $429.6 in 2005 and $563.3 thereafter.

NOTE 6--EQUITY

COMMON STOCK

     On December 31, 2000 and 1999, the Company had 1,000 shares authorized of
common stock, $.01 par value ("Common Stock"), of which 100 shares were issued,
outstanding and owned by a wholly owned subsidiary of Ispat.

CUMULATIVE PREFERRED STOCK

     On December 31, 2000 and 1999, the Company had 100 shares authorized,
issued and outstanding of Series A 8% Cumulative Preferred Stock, $.01 par value
("Preferred Stock"), which is owned by a wholly owned subsidiary of Ispat. The
Preferred Stock has liquidation preference over the Common Stock.

NOTE 7--STOCK OPTION PLANS

     In 1999, Ispat established the Ispat International N.V. Global Stock Option
Plan (the "Ispat Plan"). Under the terms of the Ispat Plan, Ispat may grant
options to senior management of Ispat and its affiliates for up to 6,000,000
shares of common stock. The exercise price of each option equals not less than
the fair market value of Ispat stock on the date of grant, and an option's
maximum term is 10 years. Options are granted at the discretion of the Ispat
Board of Director's Plan Administration Committee or its delegate. The options
vest either ratably upon each of the first three anniversaries of the grant date
or upon the death, disability or retirement of the participant. The Company has
chosen to account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of Ispat stock at the
date of the grant over the amount an employee must pay to acquire the stock. Had
compensation cost for the option plan been determined based on the fair value at
the grant date for awards in 2000 and 1999 consistent with the provisions of
SFAS No. 123, the Company's net (loss)

                                       F-12
<PAGE>   28
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 7--STOCK OPTION PLANS--(CONTINUED)

income for the years ended December 31, 2000 and 1999 would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                          YEAR ENDED              YEAR ENDED
                                                       DECEMBER 31, 2000       DECEMBER 31, 1999
                                                       -----------------       -----------------
<S>                                                    <C>                     <C>
Net (Loss) Income--as reported..................            $(32.9)                  $36.0
Net (Loss) Income--pro forma....................            $(34.2)                   35.4
</TABLE>

     The fair value of each option grant of Ispat stock is estimated on the date
of grant using the Binomial Option Pricing Model with the following
weighted-average assumptions used:

<TABLE>
<CAPTION>
                                                                        YEAR OF GRANT
                                                                     -------------------
                                                                     2000          1999
                                                                     -----         -----
<S>                                                                  <C>           <C>
Dividend yield..............................................          3.85%         0.86%
Expected annualized volatility..............................         66.00%        63.00%
Discount rate--Bond equivalent yield........................          5.27%         6.07%
Expected life in years......................................             8             8
</TABLE>

     The status of the Ispat Plan with respect to the Company is summarized
below:

<TABLE>
<CAPTION>
                                                             NUMBER OF       WEIGHTED AVERAGE
                                                              SHARES          EXERCISE PRICE
                                                             ---------       ----------------
<S>                                                          <C>             <C>
Outstanding at January 1, 1999........................              --                --
Granted...............................................         670,500            $11.94
                                                             ---------            ------
Outstanding at December 31, 1999......................         670,500             11.94
Granted...............................................         701,500              8.57
Exercised.............................................              --                --
Forfeitures...........................................        (150,000)            11.94
Outstanding at December 31, 2000......................       1,222,000            $10.01
                                                             =========            ======
</TABLE>

NOTE 8--RETIREMENT BENEFITS

     In connection with the Company's new labor agreement with the United
Steelworkers of America (the "USWA"), the pension and postretirement medical
plans were amended, effective August 1, 1999, to provide for plan changes as a
result of the new labor agreement. The pension plan was amended primarily to
provide for increased benefit levels. The postretirement medical plan was
amended primarily to provide for employee and retiree copayments, vision care,
retiree life insurance benefits and retiree contributions. As a result of these
plan amendments, the Company remeasured its pension and postretirement benefit
obligations under SFAS No. 87, "Employers' Accounting for Pensions" and SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
respectively, as of August 1, 1999. These remeasurements incorporated the effect
of the union plan changes as well as the effects of changes in actuarial
assumptions to reflect more current information.

PENSIONS

     The Company Pension Plan and Pension Trust, which covers certain employees
of the Company, is a noncontributory defined benefit plan with pensions based on
final pay and years of service for all salaried employees and certain wage
employees, and years of service and a fixed rate (in most instances based on
frozen pay or on job class) for all other wage employees, including members of
the United Steelworkers of America.

                                       F-13
<PAGE>   29
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     Reconciliation of the pension benefit obligation and plan assets from
December 1, 2000 and 1999 through the measurement date of November 30 was as
follows:

<TABLE>
<CAPTION>
                                                       DECEMBER 1, 1999    DECEMBER 1, 1998
                                                            THROUGH             THROUGH
                                                       NOVEMBER 30, 2000   NOVEMBER 30, 1999
                                                       -----------------   -----------------
<S>                                                    <C>                 <C>
Change in benefit obligation:
  Benefit obligation at beginning of period..........      $2,033.0            $2,087.9
  Service cost.......................................          28.7                24.8
  Interest cost......................................         158.6               143.3
  Plan amendments loss...............................            --               161.3
  Actuarial loss (gain)..............................          44.6              (220.4)
  Benefits paid......................................        (171.0)             (163.9)
                                                           --------            --------
  Benefit obligation at end of period................      $2,093.9            $2,033.0
                                                           ========            ========
Change in plan assets:
  Fair value at beginning of period..................      $2,097.8            $1,963.3
  Actual return......................................         (35.9)              274.7
  Employer contribution..............................          30.7                23.7
  Benefits paid......................................        (171.0)             (163.9)
                                                           --------            --------
  Fair value at end of period........................      $1,921.6            $2,097.8
                                                           ========            ========
</TABLE>

     The plan amendment loss for the period ended November 30, 1999 reflects the
plan changes that resulted from the new labor agreement with the USWA as well as
the effects of changes in actuarial assumptions. The amendment provides that
pension benefits for most of the Company's non-represented salaried employees
will be determined in "cash balance" arrangement. For each covered employee, a
notional account is credited each quarter with a percentage of pay and interest.
At termination, the account balance is available to the employee as either a
lump-sum payment or an annuity.

     The (unfunded) funded status of the pension plan is as follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
Benefit obligation..........................................    $2,093.9       $2,033.0
Fair value of assets........................................     1,921.6        2,097.8
                                                                --------       --------
(Unfunded) funded status of plan............................      (172.3)          64.8
Unrecognized net loss (gain)................................        65.0         (210.2)
Unrecognized prior service cost.............................        89.0           96.8
                                                                --------       --------
Net amount recognized.......................................    $  (18.3)      $  (48.6)
                                                                ========       ========
</TABLE>

     Amounts recognized in the consolidated balance sheets consist of:

<TABLE>
<S>                                                           <C>            <C>
Accrued benefit liability...................................      (156.5)         (48.6)
Intangible asset............................................        89.0             --
Accumulated other comprehensive income......................        49.2             --
                                                                --------       --------
Net amount recognized.......................................    $  (18.3)      $  (48.6)
                                                                ========       ========
</TABLE>

                                       F-14
<PAGE>   30
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     The following weighted average assumptions were used in accounting for the
pension plan:

<TABLE>
<CAPTION>
                                                     NOVEMBER 30,   NOVEMBER 30,   AUGUST 1,
                                                         2000           1999         1999
                                                     ------------   ------------   ---------
<S>                                                  <C>            <C>            <C>
Discount rate......................................      8.00%          8.00%         7.75%
Expected return on plan assets.....................      9.50%          9.50%         9.50%
Rate of compensation increase......................      4.00%          4.00%         4.00%
</TABLE>

     The net periodic benefit cost (credit) was as follows:

<TABLE>
<CAPTION>
                                                                                 JULY 17, 1998
                                          YEAR ENDED          YEAR ENDED            THROUGH
                                       DECEMBER 31, 2000   DECEMBER 31, 1999   DECEMBER 31, 1998
                                       -----------------   -----------------   -----------------
<S>                                    <C>                 <C>                 <C>
Service cost.........................       $  28.7             $  24.8             $ 11.7
Interest cost........................         158.6               143.3               64.9
Expected return on plan assets.......        (194.4)             (190.5)             (85.7)
Amortization.........................           7.6                (0.9)                --
                                            -------             -------             ------
Net periodic benefit cost (credit)...       $   0.5             $ (23.3)            $ (9.1)
                                            =======             =======             ======
</TABLE>

SAVINGS PLAN

     The Company also sponsors a savings plan through which eligible salaried
employees may elect to save a portion of their salary, and the Company matches
the first five percent of each participant's salary contributed, subject to
certain IRS limitations. Compensation expense related to this plan amounted to
$4.5 and $4.9, respectively, for the years ended December 31, 2000 and 1999.

BENEFITS OTHER THAN PENSION AND SAVINGS PLAN

     Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that require deductible
and co-insurance payments from retirees. The postretirement life insurance
benefit formula used in the determination of postretirement benefit cost is
primarily based on applicable annual earnings at retirement for salaried
employees and specific amounts for hourly employees. The Company does not
prefund any of these postretirement benefits. Effective January 1, 1994, a
Voluntary Employee Benefit Association Trust was established for payment of
health care benefits made to United Steelworkers of America retirees. Funding of
the Trust is made as claims are submitted for payment.

     Reconciliation of the postretirement benefit obligation follows:

<TABLE>
<CAPTION>
                                                         DECEMBER 1, 1999     DECEMBER 1, 1998
                                                              THROUGH              THROUGH
                                                         NOVEMBER 30, 2000    NOVEMBER 30, 1999
                                                         -----------------    -----------------
<S>                                                      <C>                  <C>
Benefit obligation at beginning of period............         $710.3               $ 953.4
Service cost.........................................            8.3                  11.1
Interest cost........................................           55.6                  59.6
Plan amendments gain.................................             --                 (56.8)
Special termination benefits.........................            0.2                    --
Actuarial loss/(gain)................................           51.1                (209.4)
Benefits paid........................................          (55.8)                (47.6)
                                                              ------               -------
Benefit obligation at end of period..................         $769.7               $ 710.3
                                                              ======               =======
</TABLE>

                                       F-15
<PAGE>   31
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     The plan amendments gain for the period ended November 30, 1999 result from
a plan amendment effective January 1, 1999 requiring increased contributions
from salaried retirees for health care coverage, as well as increases in
deductibles and copays. In addition, life insurance coverage for salaried
retirees has been reduced, effective at the same date. The gain for the 1999
period was also affected by the new labor agreement with the USWA which provided
for employee and retiree copayments, vision care, retiree life insurance
benefits and retiree contributions.

     The unfunded status of the postretirement benefit obligation is as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,    DECEMBER 31,
                                                                    2000            1999
                                                                ------------    ------------
<S>                                                             <C>             <C>
Benefit obligation..........................................     $   769.7       $   710.3
Fair value of assets........................................            --              --
                                                                 ---------       ---------
Unfunded status of plan.....................................        (769.7)         (710.3)
Unrecognized net (gain) loss................................        (115.9)         (175.0)
Unrecognized prior service cost.............................        (126.9)         (146.6)
                                                                 ---------       ---------
Accrued postretirement benefit..............................     $(1,012.5)      $(1,031.9)
                                                                 =========       =========
</TABLE>

     The following weighted average assumptions were used in accounting for the
postretirement benefit plan:

<TABLE>
<CAPTION>
                                                       NOVEMBER 30,    NOVEMBER 30,    AUGUST 1,
                                                           2000            1999          1999
                                                       ------------    ------------    ---------
<S>                                                    <C>             <C>             <C>
Discount rate......................................        8.00%           8.00%         7.75%
Rate of compensation increase......................        4.00%           4.00%         4.00%
Health care cost trend rate........................        4.50%           4.50%         4.50%
</TABLE>

     The net periodic benefit cost was as follows:

<TABLE>
<CAPTION>
                                                                                     JULY 17, 1998
                                            YEAR ENDED           YEAR ENDED             THROUGH
                                         DECEMBER 31, 2000    DECEMBER 31, 1999    DECEMBER 31, 1998
                                         -----------------    -----------------    -----------------
<S>                                      <C>                  <C>                  <C>
Service cost.........................         $  8.3               $ 11.1                $ 6.9
Interest cost........................           55.6                 59.6                 30.8
Amortization.........................          (27.8)               (14.2)                  --
Special termination benefits.........            0.2                   --                   --
Recognized loss/(gain)...............             --                 (3.2)                  --
                                              ------               ------                -----
Net periodic benefit cost............         $ 36.3               $ 53.3                $37.7
                                              ======               ======                =====
</TABLE>

     An increase of 1% in the health care cost trend rate would increase the
benefit obligation by $99.6 and the annual net periodic cost by $9.6. A 1%
decrease would reduce the benefit obligation by $83.6 and the annual net
periodic annual net cost by $7.9.

     For purposes of measuring the expected cost of benefits covered by the plan
for next year, a weighted average health care trend rate of 4.50% was assumed
for 2001 and the years thereafter.

                                       F-16
<PAGE>   32
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 9--INCOME TAXES

     The (benefit) provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                      PERIOD FROM
                                                                                     JULY 17, 1998
                                            YEAR ENDED           YEAR ENDED             THROUGH
                                         DECEMBER 31, 2000    DECEMBER 31, 1999    DECEMBER 31, 1998
                                         -----------------    -----------------    -----------------
<S>                                      <C>                  <C>                  <C>
Current federal......................         $(14.3)               $11.6                $ 7.0
Deferred federal.....................          (11.8)                 6.4                 (3.1)
Current state........................            0.2
Deferred state.......................            0.4                  1.0                  0.6
                                              ------                -----                -----
     Total...........................         $(25.5)               $19.0                $ 4.5
                                              ======                =====                =====
</TABLE>

     Total income taxes reflected in the Consolidated Statement of Operations
differ from the amounts computed by applying the statutory federal corporate tax
rate as follows:

<TABLE>
<CAPTION>
                                                                                      PERIOD FROM
                                                                                     JULY 17, 1998
                                            YEAR ENDED           YEAR ENDED             THROUGH
                                         DECEMBER 31, 2000    DECEMBER 31, 1999    DECEMBER 31, 1998
                                         -----------------    -----------------    -----------------
<S>                                      <C>                  <C>                  <C>
Federal income tax (benefit) expense
  computed at statutory tax rate.....         $(20.6)               $19.3                $ 5.9
Additional tax expense (benefit)
  from:
  State and local income taxes.......            0.4                  0.2                  0.6
  Percentage depletion...............           (4.1)                (3.9)                (1.9)
  All other, net.....................           (1.2)                 3.4                 (0.1)
                                              ------                -----                -----
     Total...........................         $(25.5)               $19.0                $ 4.5
                                              ======                =====                =====
</TABLE>

                                       F-17
<PAGE>   33
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 9--INCOME TAXES--(CONTINUED)

     Deferred tax assets and liabilities arise from the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for tax purposes and
resulted from the following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,    DECEMBER 31,
                                                                    2000            1999
                                                                ------------    ------------
<S>                                                             <C>             <C>
Noncurrent deferred tax assets:
  Operating loss carryforwards..............................      $ 101.2         $  40.4
  Alternative minimum tax credit carryforward...............          2.4            15.1
  Retirement benefit obligations............................        385.4           404.0
  Shutdown accruals.........................................         10.3            15.3
  Environmental accruals....................................          9.6             9.9
  Tax effect of comprehensive income items..................         18.3            (0.6)
  Other.....................................................        (45.4)          (29.8)
                                                                  -------         -------
     Total noncurrent deferred tax assets...................        481.8           454.3
Noncurrent deferred tax liabilities:
  Property, plant and equipment.............................       (482.5)         (477.3)
                                                                  -------         -------
     Net noncurrent deferred tax (liability) asset..........      $  (0.7)        $ (23.0)
                                                                  =======         =======
Current deferred tax assets:
  Accrued vacations.........................................      $  11.2         $  11.2
  Property taxes............................................          1.4             6.0
  UNICAP--Inventory.........................................          4.4             0.6
  Deferred state taxes......................................          0.5             0.4
  Amortization expense......................................         (2.1)           (1.4)
  Other.....................................................         10.0             1.1
                                                                  -------         -------
     Total current deferred tax assets......................      $  25.4         $  17.9
                                                                  =======         =======
</TABLE>

     Based on estimates of projected future taxable income, the Company believes
that it is more likely than not that the tax benefits currently generated will
be realized in future periods. Accordingly, no valuation allowance has been
established.

NOTE 10--RELATED PARTY TRANSACTIONS

     The Company was charged $3.4, $5.3 and $3.4 by Ispat for the years ended
December 31, 2000 and 1999 and the period from July 17, 1998 through December
31, 1998, respectively, for management, financial and legal services provided to
the Company. The Company was also charged $3.8 and $2.5 by Ispat North America
Holding Inc. for corporate expense allocation for the years ended December 31,
2000 and 1999, respectively. The Company charged Ispat $1.1 for information
technology services and $1.2 for research services for the year ended December
31, 2000.

     The Company purchased $103.2, $82.8 and $56.7 of inventory from
subsidiaries of Ispat for the years ended December 31, 2000 and 1999 and the
period from July 17, 1998 through December 31, 1998, respectively. The Company
sold $2.9 and $2.2 of inventory to subsidiaries of Ispat for the years ended
December 31, 2000 and 1999, respectively.

     The Company's long-term debt due to a related company of $682.5 and $689.5
as of December 31, 2000 and 1999, respectively, is payable to Ispat Inland
Finance LLC, a wholly owned subsidiary of the Borrower

                                       F-18
<PAGE>   34
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 10--RELATED PARTY TRANSACTIONS--(CONTINUED)

and Ispat. Interest expense related to this debt was $65.9, $56.5 and $29.5 for
the years ended December 31, 2000 and 1999 and the period from July 17, 1998 to
December 31, 1998, respectively. This debt arose in connection with the
financing of the Acquisition (see Note 5). The Company's note receivable from a
related company of $4.9 and $8.9 December 31, 2000 and 1999, respectively, is
due from Ispat Inland, L.P., a wholly owned subsidiary of Ispat. Interest income
on this receivable was $0.6, $0.8 and $0.4 for the years ended December 31, 2000
and 1999 and the period from July 17, 1998 through December 31, 1998,
respectively. This receivable also arose in connection with the financing of the
Acquisition and payment is due on July 16, 2006 unless Ispat Inland, L.P.
chooses to prepay.

NOTE 11--COMMITMENTS AND CONTINGENCIES

     At December 31, 2000, the Company guarantees $6.7 and $116.6 of long-term
debt attributable to PCI Associates and I/N Kote (See Note 14), two of its
equity investments, respectively.

     The Company entered into an agreement with the Pension Benefit Guaranty
Corporation ("PBGC") in 1998 to provide certain financial assurances with
respect to the Company's Pension Plan. In accordance with this agreement, the
Company provided the PBGC a letter of credit in the amount of $160, made a cash
contribution of $30.7 in 2000, $23.7 in 1999 and $25.0 in 1998 to the Pension
Trust and committed to certain minimum funding requirements, including to fund
normal cost of the Pension Plan plus, for the next three years, an additional $5
per year. In addition, the Company granted to the PBGC a first priority lien on
selected assets. The agreement has a term of at least five years or until
certain financial tests are met, whichever is later; however, the agreement
could terminate within five years if the Pension Plan is terminated or the
Company is sold and the purchaser meets certain tests.

     In 1998, the Company entered into an agreement with a third party to
purchase 1.2 million tons of coke annually for approximately 15 years on a
take-or-pay basis at prices determined by certain cost factors from a heat
recovery coke battery facility located on land leased from the Company. Under a
separate tolling agreement with another third party, the Company has committed
to pay tolling charges over approximately 15 years to desulphurize flue gas from
the coke battery and to convert the heat output from the coke battery to
electrical power and steam. As of December 31, 2000 and 1999, the estimated
minimum tolling charges remaining over the life of this agreement were
approximately $212.1 and $242.4, respectively.

     As part of the agreement covering the 1990 sale of the Inland Lime & Stone
Company division assets, the Company agreed, subject to certain exceptions, to
purchase, at prices which approximate market, the annual limestone needs of the
Indiana Harbor Works through 2002.

     It is anticipated that the Company will make capital expenditures of $2 to
$5 annually in each of the next five years for the construction and have ongoing
annual expenditures (non-capital) of $40 to $50 for the operation of air and
water pollution control facilities to comply with current federal, state and
local laws and regulations.

     The Company is involved in various environmental and other administrative
or judicial actions initiated by governmental agencies. While it is not possible
to predict the results of these matters, the Company does not expect
environmental expenditures, excluding amounts that may be required in connection
with the 1993 consent decree in the 1990 EPA lawsuit, to materially affect the
Company's results of operations or financial position. Corrective actions
relating to the EPA consent decree may require significant expenditures over the
next several years that may be material to the results of operations or
financial position of the Company. At December 31, 2000 and 1999, the Company's
reserves for environmental liabilities totaled $27, of which $21, is related to
the sediment remediation under the 1993 EPA consent decree.

                                       F-19
<PAGE>   35
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 11--COMMITMENTS AND CONTINGENCIES--(CONTINUED)

     The Company and its subsidiaries have various operating leases for which
the minimum lease payments are $15.6 in 2001, $12.8 in 2002, $11.5 in 2003,
$11.3 in 2004, $10.8 in 2005 and $6.1 thereafter. Rental expense for the years
ended December 31, 2000 and 1999 and the period from July 17, 1998 through
December 31, 1998 was $31.2, $27.2 and $13.8, respectively.

     The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers in connection with construction projects primarily
related to additions to property, plant and equipment, was $13.2 at December 31,
2000, $24.4 at December 31, 1999 and $7.0 at December 31, 1998.

     The Company and an independent, unaffiliated producer of raw materials are
parties to a long-term supply agreement under which the Company is obligated to
fund an escrow account to indemnify said producer of raw materials against a
specific contingency. Contributions to the escrow are determined by the
agreement and the funds are restricted from Company use while in the escrow. The
escrow will terminate no later than 2004. At December 31, 2000 and 1999, the
escrowed funds amounted to $36.2 and $20.0, respectively, and is included in
"Other assets" on the consolidated balance sheets. The Company anticipates full
recovery of the escrowed amount.

     The office of the United States Attorney for the Middle District of
Louisiana ("the U.S. Attorney") had informed the Company that it was a target of
a federal criminal grand jury investigation and one of several defendants in a
civil qui tam lawsuit filed by a private individual on behalf of the government,
alleging violations of the False Claims Act, 31 U.S.C. Section 3729, et seq. The
investigation and the lawsuit related to the sale of polymer coated steel by the
Company to a culvert fabricator for use in federal and state highway
construction projects in Louisiana. Since being notified of the lawsuit and
investigation, Ispat and the Company have provided their complete cooperation
with investigators. On January 17, 2001, to fully resolve this matter, the
Company agreed to a settlement of $15.5 million, which is half of the total
settlement among the United States, the state of Louisiana, the relators, and
the defendants. The settlement has been approved by the U.S. District Court in
Baton Rouge, Louisiana.

     All the allegations by the U.S. Attorney relate to events that occurred
prior to the May 27, 1998 execution of the Merger Agreement among Ispat, the
Company, Inland Merger Sub, Inc. and Inland Steel Industries, Inc. (the
predecessor company to Ryerson Tull, Inc.), as amended. Ispat and the Company
have notified Ryerson Tull, Inc. of their intention to seek indemnification and
other remedies, under the Merger Agreement and on other grounds, for the
settlement amount and for all other losses in connection with this matter.

     In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of our business. The Company does not
believe that the adverse determination of any such pending routine litigation,
either individually or in the aggregate, will have a material adverse effect on
our business, financial condition, results of operations, cash flows or
prospects.

NOTE 12--DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.

DERIVATIVES

     The Company uses futures and swap contracts to manage fluctuations in the
cost of natural gas and certain nonferrous metals, primarily zinc which is used
in the coating of steel. Timing of these transactions corresponds to the
expected need for the underlying physical commodity and is intended as a hedge
against the

                                       F-20
<PAGE>   36
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 12--DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS--(CONTINUED)

cost volatility of these commodities. The counterparties to these contracts are
internationally recognized companies which are not considered a credit risk by
the Company. Contracts generally do not extend out beyond one year. The Company
had contracts for these commodities that amounted to $74.6 and $18.9 as of
December 31, 2000 and 1999, respectively, the fair value of which was $55.2 and
$19.3, respectively.

     A portion of the floating rate debt used in connection with the financing
of the Acquisition was hedged by the borrower through the use of an interest
collar (see Note 5).

LONG-TERM DEBT

     The estimated fair value of the Company's long-term debt (including current
portions thereof), using quoted market prices of Company debt securities
recently traded and market-based prices of similar securities for those
securities not recently traded, was $920 and $919 at December 31, 2000 and 1999,
respectively, as compared with the carrying value of $1,093 and $964 in the
balance sheet at December 31, 2000 and 1999, respectively

NOTE 13--I/N TEK AND I/N KOTE JOINT VENTURES

     I/N Tek, a general partnership formed for a joint venture between the
Company and Nippon Steel Corporation ("NSC"), owns and operates a cold-rolling
facility. I/N Tek is 60% owned by a wholly owned subsidiary of the Company and
40% owned by an indirect wholly owned subsidiary of NSC. The Company has rights
to the productive capacity of the facility, except in certain limited
circumstances and, under a tolling arrangement with I/N Tek, has an obligation
to use the facility for the production of cold rolled steel. Under the tolling
arrangement, the Company was charged $146.1, $144.3 and $68.8 for such tolling
services for the years ended December 31, 2000 and 1999 and the period from July
17, 1998 through December 31, 1998, respectively, and owed $15.4 and $8.4 to I/N
Tek at year-end 2000 and 1999, respectively, related to such tolling services.

     The Company and NSC also own and operate another joint venture which
consists of a 400,000 ton electrogalvanizing line and a 500,000 ton hot-dip
galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general
partnership formed for this joint venture, is owned 50% by a wholly owned
subsidiary of the Company and 50% by an indirect wholly owned subsidiary of NSC.
The Company and NSC each has guaranteed the share of long-term financing
attributable to their respective subsidiary's interest in the partnership. I/N
Kote had $233 and $285 outstanding under its long-term financing agreement at
December 31, 2000 and 1999, respectively. I/N Kote is required to buy all of its
cold rolled steel from the Company, which is required to furnish such cold
rolled steel at a price that results in an annual return on equity to the
partners of I/N Kote, depending upon operating levels, of up to 10% after
operating and financing costs. This price may be subject to an adjustment
("return on sales adjustment" or "ROS adjustment") if the Company's return on
sales ("ROS") differs from I/N Kote's ROS, as defined in the Substrate Supply
Agreement. The Company recorded sales of cold rolled steel to I/N Kote of
$343.1, $370.1 and $157.6 for the years ended December 31, 2000 and 1999 and the
period from July 17, 1998 through December 31, 1998, respectively. At December
31, 2000 and 1999, I/N Kote owed the Company $2.2 and $14.3, respectively,
related to these purchases. Prices of cold rolled steel sold by the Company to
I/N Kote are determined pursuant to the terms of the joint venture agreement and
are based, in part, on operating costs of the partnership. In 2000 and 1999, the
Company sold cold rolled steel to I/N Kote at prices that exceeded the Company's
production costs but were less than the market prices for cold rolled steel
products. I/N Kote also provides tolling services to the Company for which it
was charged $1.5, $3.2 and $4.7 for the years ended December 31, 2000 and 1999
and the period from July 17, 1998 through December 31, 1998, respectively. The
Company sells all I/N Kote products that are distributed in North America. The
Company receives a 1%
                                       F-21
<PAGE>   37
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 13--I/N TEK AND I/N KOTE JOINT VENTURES--(CONTINUED)

sales commission on I/N Kote sales for which it earned $5.6, $6.0 and $2.6 for
the years ended December 31, 2000 and 1999 and the period from July 17, 1998
through December 31, 1998, respectively.

     During 2000, certain conditions (as defined in the Substrate Supply
Agreement) were met resulting in a return on sales (ROS) adjustment being
realized by the Company. The Company recorded a net adjustment of approximately
$5.2 million. The adjustment increases the aggregate substrate price for 2000
which results in the Company's return on sales being equal to the return on
sales of I/N Kote. As further outlined in the Substrate Supply Agreement, the
component of any ROS Adjustment which results in negative ROS for I/N Kote will
be returned to the Company and NSC in an amount prescribed by a formula in the
Substrate Supply Agreement if the Company's ROS is greater that I/N Kote's ROS
in subsequent years.

     During the development of the I/N Tek and I/N Kote joint ventures, the
Company loaned money to the joint ventures. These partner loans are included in
"Investments in and advance to joint ventures" in the balance sheet. The
outstanding balance of the I/N Tek partner loan was $17.0 and $15.7 at December
31, 2000 and 1999, respectively. The outstanding balance of the I/N Kote partner
loan was $36.1 and $36.7 at December 31, 2000 and 1999, respectively.

     Related to the I/N Tek and I/N Kote joint ventures, the Company owns common
stock of NSC. At December 31, 2000 and 1999, this stock had a fair value of $4.0
and $5.7, respectively. Fair value was determined based on quoted market price.
The investment is included in "Investments in and advances to joint ventures" in
the balance sheet. Differences between recorded value and fair value are
recorded net of tax to Other Comprehensive Income.

NOTE 14--INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

     The Company's investments in unconsolidated joint ventures accounted for by
the equity method consist primarily of its 60% interest in I/N Tek, 50% interest
in I/N Kote, 50% interest in PCI Associates and 40% interest in the Empire Iron
Mining Partnership ("Empire"). I/N Tek and I/N Kote are joint ventures with NSC
(see Note 13). The Company does not exercise control over I/N Tek, as all
significant management decisions of the joint venture require agreement by both
of the partners. Due to this lack of control by the Company, the Company
accounts for its investment in I/N Tek under the equity method. PCI Associates
is a joint venture which operates a pulverized coal injection facility at the
Indiana Harbor Works. Empire is an iron ore mining and pelletizing venture owned
in various percentages primarily by U.S. steel companies. Following is a summary
of combined financial information of the Company's unconsolidated joint
ventures:

<TABLE>
<CAPTION>
                                                                  2000        1999
                                                                --------    --------
<S>                                                             <C>         <C>
Results of operations for the year ended December 31:
  Gross revenue.............................................    $1,020.8    $1,036.8
  Costs and expenses........................................       936.7       934.5
                                                                --------    --------
  Net income................................................    $   84.1    $  102.3
                                                                ========    ========
Financial position at December 31:
  Current assets............................................    $  231.9    $  248.0
  Total assets..............................................     1,198.5     1,274.2
  Current liabilities.......................................       228.9       234.7
  Total liabilities.........................................       806.7       893.2
  Net assets................................................       391.8       381.0
</TABLE>

                                       F-22
<PAGE>   38
  ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)--(CONTINUED)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 15--BUSINESS SEGMENTS AND CONCENTRATION OF RISKS

     The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." The Company and its subsidiaries operate in
a single business segment, which comprises the operating companies and divisions
involved in the manufacturing of basic steel products and related raw material
operations.

     The Company both produces and sells a wide range of steels, of which
approximately 99% consists of carbon and high-strength low-alloy steel grades.
For the years ended December 31, 2000 and 1999, approximately 79% of the sales
were to customers in five mid-American states, and 93% were to customers in 20
mid-American states. Over half the sales are to the steel service center and
transportation (including automotive) markets.

     Sales to Ryerson Tull, Inc. approximated 10% and 12% of consolidated net
sales in the years ended December 31, 2000 and 1999, respectively. No other
customer, except I/N Kote (see Note 13), accounted for more than 10% of the
consolidated net sales of the Company during the noted periods.

     As of December 31, 2000, approximately 77% of the active workforce was
represented by the United Steelworkers of America. The existing labor contract
between the USWA and the Company expires July 31, 2004.

NOTE 16--CONSOLIDATED QUARTERLY SALES AND EARNINGS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     2000
                                                  -------------------------------------------
                                                      FIRST       SECOND     THIRD    FOURTH
                                                     QUARTER      QUARTER   QUARTER   QUARTER
                                                     -------      -------   -------   -------
<S>                                               <C>             <C>       <C>       <C>
Net sales.......................................     $617.4       $609.5    $549.4    $528.9
Operating profit (loss).........................       34.6         27.7      10.6     (37.1)
Net income (loss)...............................        8.5          3.9     (10.2)    (35.1)
</TABLE>

<TABLE>
<CAPTION>
                                                                     1999
                                                  -------------------------------------------
                                                      FIRST       SECOND     THIRD    FOURTH
                                                     QUARTER      QUARTER   QUARTER   QUARTER
                                                     -------      -------   -------   -------
<S>                                               <C>             <C>       <C>       <C>
Net sales.......................................     $619.9       $615.4    $576.9    $580.3
Operating profit................................       18.9         43.3      34.0      45.7
Net income (loss)...............................       (2.8)        14.0       7.9      16.9
</TABLE>

<TABLE>
<CAPTION>
                                                           1998
                                                  -----------------------
                                                   PERIOD FROM
                                                  JULY 17, 1998
                                                     THROUGH
                                                  SEPTEMBER 30,   FOURTH
                                                      1998        QUARTER
                                                  -------------   -------
<S>                                               <C>             <C>       <C>       <C>
Net sales.......................................     $483.0       $592.4
Operating profit................................       13.2         47.3
Net income (loss)...............................       (4.4)        16.7
</TABLE>

                                       F-23
<PAGE>   39

         ISPAT INLAND INC. AND SUBSIDIARY COMPANIES (SUCCESSOR COMPANY)

                            SCHEDULE II -- RESERVES

FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 AND THE PERIOD FROM JULY 17, 1998
                           THROUGH DECEMBER 31, 1998
                  (Dollars in Millions except per share data)

<TABLE>
<CAPTION>
                                                                   PROVISION FOR ALLOWANCES,
                                                                  CLAIMS AND DOUBTFUL ACCOUNTS
                                                  ------------------------------------------------------------
                                                   BALANCE AT       ADDITIONS       DEDUCTIONS      BALANCE AT
                                                  BEGINNING OF      CHARGED TO         FROM           END OF
                                                     PERIOD           INCOME         RESERVES         PERIOD
                                                  ------------      ----------      ----------      ----------
<S>                                               <C>               <C>             <C>             <C>
January 1, 2000 through December 31, 2000.......     $18.6             $0.1            $1.7           $17.0
January 1, 1999 through December 31, 1999.......      17.1              1.9             0.4            18.6
July 17, 1998 through December 31, 1998.........      16.9              0.2              --            17.1
</TABLE>

<TABLE>
<CAPTION>
                                                                     RESTRUCTURING RESERVE
                                                  ------------------------------------------------------------
                                                   BALANCE AT       ADDITIONS       DEDUCTIONS      BALANCE AT
                                                  BEGINNING OF      CHARGED TO         FROM           END OF
                                                     PERIOD          RESERVES        RESERVES         PERIOD
                                                  ------------      ----------      ----------      ----------
<S>                                               <C>               <C>             <C>             <C>
January 1, 2000 through December 31, 2000.......     $ 6.1             $4.1(A)        $ 6.1(A)         $4.1
January 1, 1999 through December 31, 1999.......       7.7              9.1             9.2(A)          6.1
                                                                                        1.6(B)
                                                                                       (0.1)(C)
July 17, 1998 through December 31, 1998.........      17.3               --             8.6(A)          7.7
                                                                                        0.9(B)
                                                                                        0.1(C)
</TABLE>

---------------
NOTES:

(A) Workforce reduction costs.

(B) Acquisition costs.

(C) Other costs.

<TABLE>
<CAPTION>
                                                                       SHUTDOWN RESERVES
                                                  ------------------------------------------------------------
                                                   BALANCE AT       ADDITIONS       DEDUCTIONS      BALANCE AT
                                                  BEGINNING OF      CHARGED TO         FROM           END OF
                                                     PERIOD           INCOME         RESERVES         PERIOD
                                                  ------------      ----------      ----------      ----------
<S>                                               <C>               <C>             <C>             <C>
January 1, 2000 through December 31, 2000.......     $27.4             $ --            $1.0           $26.4
January 1, 1999 through December 31, 1999.......      29.0              0.1             1.7            27.4
July 17, 1998 through December 31, 1998.........      29.9               --             0.9            29.0
</TABLE>

                                       F-24
<PAGE>   40

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
  INLAND STEEL COMPANY

     In our opinion, the accompanying consolidated statements of operations, of
cash flows and of reinvested earnings present fairly, in all material respects,
the results of operations and cash flows of Inland Steel Company its
subsidiaries for the period January 1, 1998 through July 16, 1998 in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

                                                      PRICEWATERHOUSECOOPERS LLP

Chicago, Illinois
January 8, 1999

                                       F-25
<PAGE>   41

      INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)

         CONSOLIDATED STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS

<TABLE>
<CAPTION>
                                                                       PERIOD FROM
                                                                     JANUARY 1, 1998
                                                                         THROUGH
                                                                      JULY 16, 1998
                                                                     ---------------
                                                                       (DOLLARS IN
                                                                        MILLIONS)
<S>                                                                  <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Net sales...................................................            $1,310.0
                                                                        --------
Operating costs and expenses
  Cost of goods sold (excluding depreciation)...............             1,127.8
  Selling, general and administrative expenses..............                22.3
  Depreciation..............................................                74.7
  State, local and miscellaneous taxes......................                34.6
                                                                        --------
     Total..................................................             1,259.4
                                                                        --------
Operating profit............................................                50.6
Other expense:
  General corporate expense, net of income items............                 6.9
  Interest and other expense on debt........................                22.0
                                                                        --------
Income before income taxes..................................                21.7
Provision for income taxes..................................                 7.9
                                                                        --------
Net income..................................................            $   13.8
                                                                        ========
CONSOLIDATED STATEMENT OF REINVESTED EARNINGS
Accumulated deficit at beginning of year....................            $ (954.8)
Net income for the year.....................................                13.8
Preferred dividends declared................................               (12.9)
                                                                        --------
Accumulated deficit at end of year..........................            $ (953.9)
                                                                        ========
</TABLE>

                 See Notes to Consolidated Financial Statements
                                       F-26
<PAGE>   42

      INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     PERIOD FROM
                                                                   JANUARY 1, 1998
                                                                       THROUGH
                                                                    JULY 16, 1998
                                                                   ---------------
                                                                     (DOLLARS IN
                                                                      MILLIONS)
<S>                                                                <C>
OPERATING ACTIVITIES
  Net income................................................           $ 13.8
                                                                       ------
  Adjustments to reconcile net income to net cash from
     operating activities:
     Depreciation...........................................             74.7
     Deferred employee benefit cost.........................              6.1
     Deferred income taxes..................................             (3.3)
     Cokemaking project advance.............................               --
     Gain on sale of assets.................................             (2.7)
     Change in:
       Receivables..........................................             13.8
       Inventories..........................................              3.0
       Accounts payable.....................................            (79.9)
       Payables to related companies........................              3.1
       Accrued salaries and wages...........................              1.1
       Other accrued liabilities............................             14.4
     Other items............................................             (0.4)
                                                                       ------
     Net adjustments........................................             29.9
                                                                       ------
          Net cash from operating activities................             43.7
INVESTING ACTIVITIES
  Capital expenditures......................................            (40.8)
  Investments in and advances to joint ventures, net........             25.4
  Proceeds from sale of assets..............................              5.2
                                                                       ------
          Net cash from investing activities................            (10.2)
FINANCING ACTIVITIES
  Long-term debt issued.....................................               --
  Long-term debt retired....................................            (40.9)
  Change in notes payable to related companies..............             (1.8)
  Dividends paid............................................            (12.9)
  Short-term borrowings.....................................             50.0
                                                                       ------
          Net cash from financing activities................             (5.6)
                                                                       ------
Net increase in cash and cash equivalents...................             27.9
Cash and cash equivalents--beginning of period..............               --
                                                                       ------
Cash and cash equivalents--end of period....................           $ 27.9
                                                                       ======
SUPPLEMENTAL DISCLOSURES
  Cash paid (received) during the period for:
     Interest (net of amount capitalized)...................           $ 25.1
     Income taxes, net......................................              7.6
</TABLE>

                 See Notes to Consolidated Financial Statements
                                       F-27
<PAGE>   43

      INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)
                 STATEMENT OF ACCOUNTING AND FINANCIAL POLICIES
                  (Dollars in Millions except per share data)

     The following briefly describes the Company's principal accounting and
financial policies.

ACCOUNTING FOR EQUITY INVESTMENTS

     The Company's investments in less than majority-owned companies, joint
ventures and partnerships, and the Company's majority interest in the I/N Tek
partnership, are accounted for under the equity method.

INVENTORY VALUATION

     Inventories are valued at cost which is not in excess of market. Cost is
determined by the last-in, first-out method except for supply inventories, which
are determined by the average cost or first-in, first-out methods.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is depreciated for financial reporting
purposes over the estimated useful lives of the assets. Steelmaking machinery
and equipment, a significant class of assets, is depreciated on a
production-variable method, which adjusts straight-line depreciation to reflect
production levels at the steel plant. The adjustment is limited to not more than
a 25% increase or decrease from straight-line depreciation. Blast furnace
relining expenditures are capitalized and amortized on a unit-of-production
method over the life of the lining. All other assets are depreciated on a
straight-line method.

     Expenditures for normal repairs and maintenance are charged to income as
incurred.

     Gains or losses from significant abnormal disposals or retirements of
properties are credited or charged to income. The cost of other retired assets
less any sales proceeds is charged to accumulated depreciation.

CASH EQUIVALENTS

     Cash equivalents reflected in the Statement of Cash Flows are highly
liquid, short-term investments with maturities of three months or less. Cash
management activities are performed by the Company's parent, Inland Steel
Industries, Inc. ("Industries"), and periodic cash transfers are made, thereby
minimizing the level of cash maintained by the Company.

STOCK BASED COMPENSATION

     Financial Accounting Standards Board ("FASB") Statement No. 123,
"Accounting for Stock-Based Compensation" encourages, but does not require
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company, which participates in Industries' stock
compensation plans, has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of Industries' stock
at the date of the grant over the amount an employee must pay to acquire the
stock. Compensation cost for stock appreciation rights and performance equity
units is recorded annually based on the quoted market price of Industries' stock
at the end of the period.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to financial statements. Changes in such estimates
may affect amounts reported in future periods.

                                       F-28
<PAGE>   44

      INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 1--THE ACQUISITION

     On July 16, 1998, Ispat International N.V. ("Ispat") acquired Inland Steel
Company ("Predecessor Company") from Inland Steel Industries, Inc.
("Industries") in accordance with an Agreement and Plan of Merger ("Agreement"),
dated as of May 27, 1998, amended as of July 16, 1998 (the "Acquisition").
Inland Steel Company was renamed Ispat Inland Inc. ("Successor Company") or (the
"Company") on September 1, 1998. The Predecessor Company was acquired for
$1,143.1.

NOTE 2--INVENTORIES

     The effect on cost of goods sold of LIFO liquidations was not material.

NOTE 3--LONG-TERM DEBT

     In July 1998, the Company defeased the remaining $26 of Series T First
Mortgage Bonds, due December 1, 1998.

     Interest cost incurred by the Company totaled $22.4 for the period from
January 1, 1998 through July 16, 1998. Included in these totals is capitalized
interest of $.4 for the period from January 1, 1998 through July 16, 1998.

NOTE 4--STOCK OPTION PLANS

     The Company has adopted the disclosure-only provisions of FASB Statement
No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation
cost has been recognized for the stock option plans.

     Company employees participate in the Industries employee stock purchase
plan where employees have the opportunity to sign up twice a year to purchase
stock at the end of each six month period at a price that is 90 percent of the
fair market value price on the last day of the period.

NOTE 5--DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.

DERIVATIVES

     The Company has only limited involvement with derivative financial
instruments, none of which are used for trading purposes. Derivatives are used
to hedge exposure to fluctuations in costs caused by the price volatility of
certain metal commodities and natural gas supplies. Gains and losses associated
with these hedging transactions become part of the cost of the item being
hedged. At no time during 1998 were such hedging transactions material.

NOTE 6--RETIREMENT BENEFITS

PENSIONS

     The Inland Steel Industries Pension Plan and Pension Trust, which covers
certain employees of the Company, also covers certain employees of Industries
and of certain of Industries' other subsidiaries. The plan is a non-contributory
defined benefit plan with pensions based on final pay and years of service for
all salaried employees and certain wage employees, and years of service and a
fixed rate (in most instances based on frozen pay or on job class) for all other
wage employees, including members of the United Steelworkers of

                                       F-29
<PAGE>   45
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)--(CONTINUED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 6--RETIREMENT BENEFITS--(CONTINUED)

America. Because the fair value of pension plan assets pertains to all
participants in the plan, no separate determination of the fair value of such
assets is made solely with respect to the Company.

BENEFITS OTHER THAN PENSION

     Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that involve deductible
and co-insurance requirements. The postretirement life insurance benefit formula
used in the determination of postretirement benefit cost is primarily based on
applicable annual earnings at retirement for salaried employees and specific
amounts for hourly employees. The Company does not prefund any of these
postretirement benefits. Effective January 1, 1994, a Voluntary Employee Benefit
Association Trust was established for payment of health care benefits to United
Steelworkers of America retirees. Funding of the Trust is made as claims are
submitted for payment.

NOTE 7--INCOME TAXES

     The Company participates in a tax-sharing agreement under which current and
deferred income tax provisions are determined for each company in the Industries
group on a stand-alone basis. Any current liability is paid to Industries. If
the Company is unable to use all of its allocated tax attributes (net operating
loss ("NOL") and tax credit carryforwards) in a given year but other companies
in the consolidated group are able to utilize them, then the Company will be
paid for the use of its attributes. NOL and tax credit carryforwards are
allocated to each company in accordance with applicable tax regulations as if a
company were to leave the consolidated group. Companies with taxable losses
record current income tax credits not to exceed current income tax charges
recorded by profitable companies. If Industries uses NOL carryforwards, the
Company will use the appropriate portion of that year's carryforward previously
allocated to it, if any.

     A state tax sharing agreement, similar to the federal agreement, also
exists with Industries for those states in which the consolidated group is
charged state taxes on a unitary or combined basis.

     The elements of the provisions for income taxes for each of the periods
indicated below were as follows:

<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                              JANUARY 1, 1998
                                                                  THROUGH
                                                               JULY 16, 1998
                                                              ---------------
<S>                                                           <C>
Current income taxes (benefit):
  Federal...................................................       $6.1
  State and foreign.........................................        1.2
                                                                   ----
                                                                    7.3
Deferred income taxes.......................................        0.6
                                                                   ----
       Total tax expense (benefit)..........................       $7.9
                                                                   ====
</TABLE>

     For tax purposes, the Company had available, at December 31, 1997, NOL
carryforwards for regular federal income tax purposes of approximately $651
which will expire as follows: $214 in 2006, $265 in 2007, $109 in 2008, $6 in
2009 and $57 in 2011. The Company also had investment tax credit and other
general business credit carryforwards for tax purposes of approximately $6,
which expire during the years 1998 through 2006. A valuation allowance has been
established for those tax credits which are not expected to be realized.
Additionally, in conjunction with the Alternative Minimum Tax ("AMT") rules, the
Company had available AMT credit carryforwards for tax purposes of approximately
$41, which may be used indefinitely to reduce regular federal income taxes.

                                       F-30
<PAGE>   46
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)--(CONTINUED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 7--INCOME TAXES--(CONTINUED)

     The Company believes that it is more likely than not that all of the NOL
carryforwards will be utilized prior to their expiration. This belief is based
upon the factors discussed below.

     The NOL carryforwards and existing deductible temporary differences
(excluding those relating to FASB Statement No. 106) are substantially offset by
existing taxable temporary differences reversing within the carryforward period.
Furthermore, any such recorded tax benefits which would not be so offset are
expected to be realized by continuing to achieve future profitable operations.

     Subsequent to the adoption of FASB Statement No. 109, the Company adopted
FASB Statement No. 106 and recognized the entire transition obligation at
January 1, 1992 as a cumulative effect charge in 1992. At December 31, 1997, the
deferred tax asset related to the Company's FASB Statement No. 106 obligation
was $396. To the extent that future annual charges under FASB Statement No. 106
continue to exceed deductible amounts, this deferred tax asset will continue to
grow. Thereafter, even if the Company should have a tax loss in any year in
which the deductible amount would exceed the financial statement expense, the
tax law provides for a 20-year carryforward period of that loss. Because of the
extremely long period that is available to realize these future tax benefits, a
valuation allowance for this deferred tax asset is not necessary.

     The Industries group operates in a highly cyclical industry and
consequently has had a history of generating and then fully utilizing
significant amounts of NOL carryforwards. During the years 1986 through 1989,
the Industries group utilized approximately $600 of NOL carry forwards and for
the years 1995 and 1997 in total utilized approximately $283 of NOL
carryforwards.

NOTE 8--I/N TEK AND I/N KOTE JOINT VENTURES

     I/N Tek, a general partnership formed for a joint venture between the
Company and Nippon Steel Corporation ("NSC"), owns and operates a cold-rolling
facility. I/N Tek is 60% owned by a wholly owned subsidiary of the Company and
40% owned by an indirect wholly owned subsidiary of NSC. The Company has
exclusive rights to the productive capacity of the facility, except in certain
limited circumstances, and, under a tolling arrangement with I/N Tek, has an
obligation to use the facility for the production of cold rolled steel.
Industries and NSC each have guaranteed a portion of long-term financing of I/N
Tek.

     The Company and NSC also own and operate another joint venture which
consists of a 400,000 ton electrogalvanizing line and a 500,000 ton hot-dip
galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general
partnership formed for this joint venture, is owned 50% by a wholly owned
subsidiary of the Company and 50% by an indirect wholly owned subsidiary of NSC.
The Company and NSC each have guaranteed the share of long-term financing
attributable to their respective subsidiary's interest in the partnership. I/N
Kote is required to buy all of its cold rolled steel from the Company, which is
required to furnish such cold rolled steel at a price that results in an annual
return on equity to the partners of I/N Kote, depending upon operating levels,
of up to 10% after operating and financing costs; this price may be subject to
an adjustment if the Company's return on sales differs from I/N Kote's return on
sales. Purchases of Company cold rolled steel by I/N Kote aggregated $194.5 for
the period from January 1, 1998 through July 16, 1998. Prices of cold rolled
steel sold by the Company to I/N Kote are determined pursuant to the terms of
the joint venture agreement and are based, in part, on operating costs of the
partnership. I/N Kote also provides tolling services to the Company for which it
was charged $2.4 for the period from January 1, 1998 through July 16, 1998. The
Company sells all I/N Kote products that are distributed in North America.

                                       F-31
<PAGE>   47
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)--(CONTINUED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 9--INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

     The Company's investments in unconsolidated joint ventures accounted for by
the equity method consist primarily of its 60% interest in I/N Tek, 50% interest
in I/N Kote, 50% interest in PCI Associates, 40% interest in the Empire Iron
Mining Partnership and 12 1/2% interest in Walbridge Electrogalvanizing Company.
I/N Tek and I/N Kote are joint ventures with NSC (see Note 8). The Company does
not exercise control over I/N Tek, as all significant management decisions of
the joint venture require agreement by both of the partners. Due to this lack of
control by the Company, the Company accounts for its investment in I/N Tek under
the equity method. PCI Associates is a joint venture which operates a pulverized
coal injection facility at the Indiana Harbor Works. Empire is an iron ore
mining and pelletizing ventures owned in various percentages primarily by U.S.
steel companies. Walbridge is a venture that coats cold-rolled steel in which
Inland has the right to 25% of the productive capacity. The Company sold its
interest in Walbridge on June 30, 1998 and recognized a gain on the sale of
$2.7.

NOTE 10--COMMITMENTS AND CONTINGENCIES

     As part of the agreement covering the 1990 sale of the Inland Lime & Stone
Company division assets, the Company agreed, subject to certain exceptions, to
purchase, at prices which approximate market, the annual limestone needs of the
Indiana Harbor Works through 2002.

     The Company and its subsidiaries have various operating leases for which
future minimum lease payments are estimated to total $80.1 through 2022,
including approximately $16.1 in 1998, $12.6 in 1999, $10.1 in 2000, $9.1 in
2001, and $8.7 in 2002.

     It is anticipated that the Company will make capital expenditures of $2 to
$5 annually in each of the next five years for the construction, and have
ongoing annual expenditures of $40 to $50 for the operation, of air and water
pollution control facilities to comply with current federal, state and local
laws and regulations. The Company is involved in various environmental and other
administrative or judicial actions initiated by government agencies. While it is
not possible to predict the results of these matters, the Company does not
expect environmental expenditures, excluding amounts that may be required in
connection with the consent decree in the 1990 EPA lawsuit, to materially affect
the Company's results of operations or financial position. Corrective actions
relating to the EPA consent decree may require significant expenditures over the
next several years that may be material to the results of operations or
financial position of the Company.

NOTE 11--RELATED PARTY TRANSACTIONS

     Industries has established procedures for charging its actual
administrative expenses to the operating companies owned by it. These charges
are for management, financial and legal services provided to those companies.
Charges from Industries for the period from January 1, 1998 through July 16,
1998 totaled $7.1.

     There are also established procedures to charge interest on all
intercompany loans within the Industries group of companies. Such loans
currently bear interest at the prime rate. For the period from January 1, 1998
through July 16, 1998, the Company's net interest expense to companies within
the Industries group totaled $10.3.

                                       F-32
<PAGE>   48
INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)--(CONTINUED)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in Millions except per share data)

NOTE 11--RELATED PARTY TRANSACTIONS--(CONTINUED)

     The Company sells to and purchases products from related companies at
prevailing market prices. These transactions for the indicated period, except
those with I/N Kote (see Note 8), are summarized as follows:

<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                              JANUARY 1, 1998
                                                                  THROUGH
                                                               JULY 16, 1998
                                                              ---------------
<S>                                                           <C>
Net product sales...........................................      $103.6
Net product purchases.......................................         9.0
</TABLE>

NOTE 12--CONCENTRATION OF CREDIT RISK

     The Company produces and sells a wide range of steels, of which
approximately 99% consists of carbon and high-strength low-alloy steel grades.
For the period from January 1, 1998 through July 16, 1998, approximately 77% of
the sales were to customers in five mid-American states, and 93% were to
customers in 20 mid-American states. Over half the sales are to the steel
service center and transportation (including automotive) markets.

     No customer, except I/N Kote (see Note 9), accounted for more than 10% of
the consolidated net sales of the Company during the period from January 1, 1998
through July 16, 1998.

NOTE 13--CONSOLIDATED QUARTERLY SALES AND EARNINGS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           1998
                                                            -----------------------------------
                                                                                   PERIOD FROM
                                                                                  JULY 1, 1998
                                                             FIRST     SECOND        THROUGH
                                                            QUARTER    QUARTER    JULY 16, 1998
                                                            -------    -------    -------------
<S>                                                         <C>        <C>        <C>
Net sales...............................................    $606.1     $619.9         $84.0
Gross profit............................................      32.8       46.4          (3.1)
Net income (loss).......................................       5.3       12.9          (4.4)
</TABLE>

                                       F-33
<PAGE>   49

      INLAND STEEL COMPANY AND SUBSIDIARY COMPANIES (PREDECESSOR COMPANY)
                             SCHEDULE II--RESERVES
           FOR THE PERIOD FROM JANUARY 1, 1998 THROUGH JULY 16, 1998
                  (Dollars in Millions except per share data)

<TABLE>
<CAPTION>
                                                                     PROVISION FOR ALLOWANCES,
                                                                    CLAIMS AND DOUBTFUL ACCOUNTS
                                                       ------------------------------------------------------
                                                        BALANCE AT     ADDITIONS     DEDUCTIONS    BALANCE AT
                                                       BEGINNING OF    CHARGED TO       FROM         END OF
                                                          PERIOD         INCOME       RESERVES       PERIOD
                                                       ------------    ----------    ----------    ----------
<S>                                                    <C>             <C>           <C>           <C>
January 1, 1998 through July 16, 1998..............       $16.1           $0.8           $--         $16.9
</TABLE>

                                       F-34
<PAGE>   50

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          ISPAT INLAND INC.

                                          By: /s/ PETER D. SOUTHWICK
                                            ------------------------------------
                                            Peter D. Southwick
                                            President and Chief Operating
                                              Officer
                                            (Principal Executive Officer)
                                            March 30, 2001

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                    TITLE                       DATE
                   ---------                                    -----                       ----
<S>                                               <C>                                 <C>

/s/ PETER D. SOUTHWICK                              President and Chief Operating       March 30, 2001
------------------------------------------------                Officer
Peter D. Southwick                                  (Principal Executive Officer)
                                                             and Director

/s/ MICHAEL G. RIPPEY                               Vice President -- Finance and       March 30, 2001
------------------------------------------------       Chief Financial Officer
Michael G. Rippey                                   (Principal Financial Officer)
                                                    (Principal Accounting Officer)

Lakshmi N. Mittal                          /                   Director

Robert B. McKersie                         /                   Director

Malay Mukherjee                            /                   Director

Richard Leblanc                            /                   Director
</TABLE>

                                          By: /s/ MARC R. JESKE
                                            ------------------------------------
                                            Marc R. Jeske
                                            Attorney-in-fact
                                            March 30, 2001
<PAGE>   51

                               INDEX TO EXHIBITS

<TABLE>
<C>      <S>

 2.(i)   Agreement and Plan of Merger, dated May 27, 1998, among
         Ispat International N.V., Inland Merger Sub, Inc., Inland
         Steel Industries, Inc. and Inland Steel Company. (Field as
         Exhibit 2.1 to the Company's Current Report on Form 8-K
         filed on June 9, 1998, and incorporated by reference
         herein.)
 2.(ii)  Amendment to Agreement and Plan of Merger, dated July 16,
         1998, between Ispat International N.V., Inland Steel
         Industries, Inc., Inland Merger Sub, Inc. and Inland Steel
         Company. (Filed as Exhibit 2.2 to Inland Steel Industries,
         Inc. Current Report on Form 8-K filed on July 20, 1998, and
         incorporated by reference herein.)
  .A     Copy of Restated Certificate of Incorporation of the
         Company. (Filed as Exhibit 3.(i) to the Company's Quarterly
         Report for the quarter ended September 30, 1998, and
         incorporated by reference herein.)
 3.B     Copy of By-Laws, as amended, of the Company. (Filed as
         Exhibit 3.(ii) to the Company's Quarterly Report for the
         quarter ended June 30, 1998, and incorporated by reference
         herein.)
 3.C     Corrected Certificate of the Designations, Powers,
         Preferences and Relative, Participating or Other Rights, and
         the Qualifications, Limitations or Restrictions thereof, of
         Series A 8% Preferred Stock of Ispat Inland Inc., filed
         January 3, 2000. (Filed as Exhibit 3.C to the Company's
         Annual Report on Form 10-K for the year ended December 31,
         1999, and incorporated by reference herein.)
 4.A     Copy of First Mortgage Indenture, dated April 1, 1928,
         between the Company (the "Steel Company") and First Trust
         and Savings Bank and Melvin A. Traylor, as Trustees, and of
         supplemental indentures thereto, to and including the
         Thirty-Fifth Supplemental Indenture, incorporated by
         reference from the following Exhibits: (i) Exhibits B-1(a),
         B-1(b), B-1(c), B-1(d) and B-1(e), filed with Steel
         Company's Registration Statement on Form A-2 (No. 2-1855);
         (ii) Exhibits D-1(f) and D-1(g), filed with Steel Company's
         Registration Statement on Form E-1 (No. 2-2182); (iii)
         Exhibit B-1(h), filed with Steel Company's Current Report on
         Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i), filed
         with Steel Company's Current Report on Form 8-K, dated
         February 8, 1937; (v) Exhibits B-1(j) and B-1(k), filed with
         Steel Company's Current Report on Form 8-K for the month of
         April, 1940; (vi) Exhibit B-2, filed with Steel Company's
         Registration Statement on Form A-2 (No. 2-4357); (vii)
         Exhibit B-1(l), filed with Steel Company's Current Report on
         Form 8-K for the month of January, 1945; (viii) Exhibit 1,
         filed with Steel Company's Current Report on Form 8-K for
         the month of November, 1946; (ix) Exhibit 1, filed with
         Steel Company's Current Report on Form 8-K for the months of
         July and August, 1948; (x) Exhibits B and C, filed with
         Steel Company's Current Report on Form 8-K for the month of
         March, 1952; (xi) Exhibit A, filed with Steel Company's
         Current Report on Form 8-K for the month of July, 1956;
         (xii) Exhibit A, filed with Steel Company's Current Report
         on Form 8-K for the month of July, 1957; (xiii) Exhibit B,
         filed with Steel Company's Current Report on Form 8-K for
         the month of January, 1959; (xiv) the Exhibit filed with
         Steel Company's Current Report on Form 8-K for the month of
         December, 1967; (xv) the Exhibit filed with Steel Company's
         Current Report on Form 8-K for the month of April, 1969;
         (xvi) the Exhibit filed with Steel Company's Current Report
         on Form 8-K for the month of July, 1970; (xvii) the Exhibit
         filed with the amendment on Form 8 to Steel Company's
         Current Report on Form 8-K for the month of April, 1974;
         (xviii) Exhibit B, filed with Steel Company's Current Report
         on Form 8-K for the month of September, 1975; (xix) Exhibit
         B, filed with Steel Company's Current Report on Form 8-K for
         the month of January, 1977; (xx) Exhibit C, filed with Steel
         Company's Current Report on Form 8-K for the month of
         February, 1977; (xxi) Exhibit B, filed with Steel Company's
         Quarterly Report on Form 10-Q for the quarter ended June 30,
         1978; (xxii) Exhibit B, filed with Steel Company's Quarterly
         Report on Form 10-Q for the quarter ended June 30, 1980;
         (xxiii) Exhibit 4-D, filed with Steel Company's Annual
         Report on Form 10-K for the fiscal year ended December 31,
         1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual
         Report on Form 10-K for the fiscal year ended December 31,
         1982; (xxv) Exhibit 4-E, filed with Steel Company's Annual
         Report on Form 10-K for the fiscal year
</TABLE>
<PAGE>   52
<TABLE>
<C>      <S>
         ended December 31, 1983; (xxvi) Exhibit 4(i) filed with the
         Steel Company's Registration Statement on Form S-2 (No.
         33-43393); (xxvii) Exhibit 4 filed with Steel Company's
         Current Report on Form 8-K dated June 23, 1993; (xxviii)
         Exhibit 4.C filed with Steel Company's Quarterly Report on
         Form 10-Q for the quarter ended June 30, 1995; (xxix)
         Exhibit 4.C filed with Steel Company's Quarterly Report on
         Form 10-Q for the quarter Ended September 30, 1995, and
         (xxx) Exhibit 4.C filed with Steel Company's Quarterly
         Report on Form 10-Q for the quarter ended June 30, 1996.
 4.B     Copy of consolidated reprint of First Mortgage Indenture,
         dated April 1, 1928, between the Company and First Trust and
         Savings Bank and Melvin A. Traylor, as Trustees, as Amended
         and supplemented by all supplemental indentures thereto, to
         and including the Thirteenth Supplemental Indenture. (Filed
         as Exhibit 4-E to Form S-1 Registration Statement No.
         2-9443, and incorporated by reference herein.)
 4.C     Copy of Thirty-Sixth Supplemental Indenture dated as of July
         16, 1998 from Inland Steel Company to First National Bank
         and John G. Finely as Trustees to the First Mortgage
         Indenture dated April 1, 1928, between Inland Steel Company
         and First Trust and Savings Bank and Melvin A. Taylor, as
         Trustees (filed as Exhibit 4.C to the Company's Annual
         Report on Form 10-K for the fiscal year ended December 31,
         1998, and incorporated by reference herein.
10.A     Credit Agreement dated as of July 16, 1998, among Ispat
         Inland L.P., Inland Steel Company, Burnham Trucking Company,
         Inc., Incoal Company and Credit Suisse First Boston. (Filed
         as Exhibit 10 to the Company's Annual Report on Form 10-K
         for the fiscal year ended December 31, 1998, and
         incorporated by reference herein.)
10.B     Amendment No.1 to the Credit Agreement dated as of September
         30, 1999, to the Credit Agreement dated as of July 16, 1998,
         among Ispat Inland L.P., Inland Steel Company, Burnham
         Trucking Company, Inc., Incoal Company and Credit Suisse
         First Boston. (Filed as Exhibit 10.A to the Company's Annual
         Report on Form 10-K for the year ended December 31, 1999,
         and incorporated by reference herein.)
16       Letter dated August 25, 1998 from PricewaterhouseCoopers LLP
         regarding change in certifying accountant. (Filed as Exhibit
         16.1 to the Company's Current Report on Form 8-K filed on
         August 28, 1998, and incorporated by reference herein.)
24       Powers of Attorney.
</TABLE>